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Central bank digital currencies will eventually kill Bitcoin, Edward Chancellor – a financial historian, journalist and investment strategist – believes.
Here’s how Chancellor explains his take in an interview to Reuters. He also reckons that digital currencies are cool but not stable.
Central banks are exploring digital currencies
These days, central banks of multiple leading economics, such as Japan, the US Fed, the ECB, and of developing countries as well, are looking into digital currencies, seeking to launch their own CBDCs.
The People’s Bank of China (PBOC) is the leader at the moment, as it has been testing the actual use of digital yuan (aka PBOC) by consumers.
Why CBDCs will kill Bitcoin, Chancellor explains
CBDCs are easier to “print” and distribute that cash, the financial historian stated, and first CBDC issuance is likely to raise the inflation.
However, after that, governments and central banks are likely to make a more or less fixed emission of their digital coins but slightly more lavish than 21 million of Bitcoin.
And when banks get it right with CBDCs, Edward Chancellor assumes, this will kill Bitcoin.
Overall, the historian opined, change in forms of money is regular as he gave an example of introducing paper money in the past to replace metal coins.
First paper money was easily convertible back into gold and copper coins. But when banks decided to make a bigger emission, they eliminated that option. However, in the end, paper money became widely spread.
The same thing will happen to digital currencies, Chancellor says. However, he does not mean Bitcoin here.