The Biden administration’s push for Central Bank Digital Currencies is on. From James Rickards at dailyreckoning.com:
Central bank digital currencies (CBDCs) are coming fast, and you need to be prepared for them because they’ll mark a major victory in the war against cash — and against your personal privacy.
You’ll see why today.
As the name implies, central bank digital currencies are digital, existing exclusively in electronic form. They’re not physical at all. Central banks would control them.
But it’s important to understand they’re not new currencies. They’re just digital forms of existing currencies. So the central bank digital currency of the European Central Bank will still be the euro. The central bank digital currency of the Fed will be the dollar. The Chinese yuan will be a digital yuan.
They’ll just exist in 100% digital form. A lot of people say, “Wait a second. Isn’t that a cryptocurrency?” The answer is it’s not.
Digital, but Not Crypto
Cryptocurrencies are different in some important respects. Number one, cryptocurrencies operate on a blockchain, or a digital ledger. It’s a way of keeping track of every transaction involving a particular cryptocurrency like Bitcoin.
A central bank digital currency does not have to be on a blockchain. It could be, but it probably won’t be. So it is digital, it is encrypted, but it’s not a blockchain and it’s not a cryptocurrency.