The possible potential of Central Bank Digital Currencies (CBDCs)

When we talk of CBDC what is implied by that is central bank digital currency, yes so many countries has the idea of bringing out a digital form of their money to help ease the reliance on cryptocurrencies they want to counter that by bringing their own form of digital current, that's the digital form of the country fiat money and ofcourse though we know the security risk and other potential issues that it brings I will like to talk about some of the potential of this CBDC and to show that though there are some flaws that comes with it but it isn't exactly all that bad.

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Some Good Potential Of CBDC

Well the elimination of cash is supposed to help alot in facilitating a faster form of payment, so one good potential that comes with central bank digital currency is that it will go a long way in ensuring for efficiency and speed when it comes to payment and financial transactions and this will lead to a more efficient cross-border transactions which will really be a welcome development in the financial landscape so yes this is one of the great potential of CBDC.

Also there are alot of people who may not have access to financial services too due to their geographical location and there isn't really any nearby banks for them to be able to get involved fully in the financial services they are due, this gap could be bridge to a good extent by CBDC as is a digital form of money which means one doesn't need to go to any bank and could get included in the financial services of their choice with their mobile device, faster payment and easy assessment and that's possible since we don't need physical cash, everything is on the digital space so everyone could gain financial inclusion.

Most times it's easier for criminal and Illicit activities to take place due to availability of cash to quickly settle street hoodlums who carry out immediate scandalous activities, I believe a digital form of currency will lead to decrease and over dependence on physical cash will I believe will go a long way to reduce some of this Illicit act and even help to track transactions in real time.

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Some Bad Potential Of CBDC

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Some concerns that also comes with the full implementation of this CBDCs is that it will lead to more centralization and make it easier even for the government to monitor activities of everyone and trace each person's transactions which will lead to direct violation of users privacy, it will create a kind of controlled environment for the government to better monitor all the financial moves of their citizens, ofcourse while this may be helpful in an event of tracking down a fraudulent transaction but yet it also leads to privacy concerns of all its users.

Well their is a risk also which ofcourse is one of the potential of this central bank currency, that's risk of hack, seems it's digital it makes it liable to hack, mind you, it isn't backed by blockchain network a robust and secured network but instead by a central point which means any successful attack launch will lead ofcourse to a single point of failure leaving everyone to be at the mercy of the hacker so when it comes to security issues this is vulnerable to threat posed by hackers unless ofcourse a robust security system is put in place to protect it.

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Conclusion

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Well ofcourse central bank digital currencies I believe have some good sides ofcourse but also have a potential for bad effects unless there is a way it could be combated to strike a balance so the bad effect could be reduced while ensuring or offering the benefits to the fullest degree possible.