CBDCs, according to Tether CTO Paolo Ardoino, will predominantly replace old-school payment systems and use private blockchain as a contemporary, cost-controlled tech infrastructure.
Tether’s chief technology officer, Paolo Ardoino, believes that global advancements in central bank digital currencies (CBDCs) will have little impact on the function of private stablecoins.
Ardoino added his two cents to the increasing debate over CBDCs and their potential function in the present payment system in a Twitter thread. CBDCs, he added, would only be used to replace old-school centralised payment networks like SWIFT, with most transactions taking place on private blockchains.
He went on to say that CBDCs aren’t about digitising fiat currency, which has already been done, given that the majority of modern-day transactions are digital. CBDCs’ main purpose is to employ private blockchain as a modern and cost-controlled digital infrastructure, with CBDCs handling the majority of bank transfers and credit/debit card transactions.
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– CBDCs are based on the idea that #tether had 8 years ago creating the first stablecoin
– CDBC will replace SWIFT etc
– banks will accept transfers via CBDCs as any wire
– CBDCs will settle most of credit/debit card flow, especially over the weekend— Paolo Ardoino (@paoloardoino) March 10, 2022
Tether’s CTO claims that private stablecoins like USDT will continue to be significant even in the age of government-issued digital currencies since private stablecoins allow users to transfer between chains and are available on many blockchains of their choice, while CBDCs do not.
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– CBDCs will use private blockchain as modern and cost-controlled tech infrastructure
– CBDCs won't be issued on your favourite chain, private stablecoins will continued to serve that use casePoint being: tech evolves but nothing actually changes.
Only #bitcoin is our edge.— Paolo Ardoino (@paoloardoino) March 10, 2022
Tether’s CTO’s reaction follows a growing debate about whether CBDCs will reduce the role of the private stablecoin sector. After numerous senators called for the stablecoin market to be regulated, a debate erupted in the United States.
According to the Atlantic CBDC tracker, 86 countries are actively developing their own sovereign digital currency, representing a 100 percent rise since May 2020. Nine of the 86 countries have already launched their CBDCs, with fifteen more in the prototype stage.
China is leading the CBDC race among the world’s main economies, with a fully functional digital yuan now being tested across the country. Several European countries, like France and Switzerland, have begun cross-border testing, but the United States has yet to formalise any plans for a digital currency.
Disclaimer: These are the writer’s opinions and should not be considered investment advice. Readers should do their own research.
