- CBDCs will leverage private blockchains for tech infrastructure
- They, however, won't be issued on private chains like stablecoins are at present
Chief Technology Officer at Tether, Paolo Ardoino, has dismissed concerns that central bank digital currencies (CBDCs) will affect the currently offered private stablecoins. Ardoino was speaking in regards to the debate that has been happening in recent months, as more countries are declaring ambitions in CBDCs.
CBDCs will power bank activities
Explaining his view, Ardoino engaged his Twitter followers with the perspective that CBDCs are not built to digitise fiat currencies since most transactions in the modern day are already digital.
Rather, he argued that these government-controlled digital currencies would essentially replace legacy payment systems and leverage private blockchains for their cutting-edge and cost-effective technological infrastructure.
"Few thoughts on CBDCs. FIAT is mostly digital already, but it relies on an outdated tech infra built 30y ago and kept together with rubber and bands, and it requires tons of maintenance with enormous costs and is not standardised at capillary level," he wrote on his Twitter page.
As a replacement for traditional payment systems such as the Society for Worldwide Interbank Financial Telecommunication (SWIFT), the Tether CTO said the government-managed currencies would bring to banks, among other use cases, the ability to conduct CBDC transfers just as easily as wiring cash.
CBDCs would also facilitate the majority of credit and debit transactions for banks.
"CBDCs are based on the idea that Tether had 8 years ago creating the first stablecoin. CDBCs will replace SWIFT etc., banks will accept transfers via CBDCs as any wire, CBDCs will settle most of the credit/debit card flow, especially over the weekend," he added.
They will also have their limitations
The computer scientist said he believes that the CBDCs won't shake off stablecoins. The private tokens will remain pertinent even as more and more countries move towards government-issued digital coins.
"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 case," he opined.
According to data provided by CBDC tracker, 87 countries have debuted crypto-related initiatives, out of which nine have already launched their tokens, while an additional 15 are pilot testing their projects.