It is no secret that governments around the world also want to make their own digital currency, and want to take the position of what cryptocurrencies currently have today ー digital dominance.
China, India, and even El Salvador are countries that are either in the planning or execution stage of their Central Bank Digital Currency (CBDC) plans.
And more and more countries are expressing their interest to create digital currencies of their own which, unlike cryptocurrencies, would have centralized control.
The threat of replacement
Government officials have said in the past that CBDCs will be created to replace decentralized and unregulated cryptocurrencies.
The success of CBDCs lies in the lack of a strong digital currency competitor, that is why CBDCs are going double-time to catch up with the digital asset’s almost non-stop rise.
According to U.S. Federal Reserve Chairman Jerome Powell, even though the U.S. is still considering the pros and cons of a CBDC, he said that a digital dollar could possibly wipe out cryptocurrencies.
End of crypto? Analysts doubt it
While CBDCs could hold a swaying power because they are backed by governments, many analysts doubt that holders would easily leave their cryptos.
Efforts were made in the past to put a plug on crypto’s rise, but none have become successful, and if CBDCs have a similar goal, analysts believe that governments’ digital currencies might fail.
It can be understood why governments want to stop cryptocurrencies’ rise because cryptos’ dominance will threaten their monopolistic influence on their country’s supply and demand.
Governments don’t want any currencies to be competing on their own, because competition would affect their controlling grip on the economy.
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