There has been a marked increase in the European Union’s efforts to digitalize its currency. Since the turn of the new millennium, the acronym CBDC (Central Bank Digital Currency) has been used quite a bit. The new digital euro will likely be released in the first quarter of 2019, although it won’t be until sometime in the new year.
As the EU Central Bank’s spokesman put it, there are three key uses the organization foresees:
- Person-to-person (P2P) payments for purposes other than business, such as sending money to family and friends;
- Costs incurred when purchasing items from or using the services of a company, whether conducted digitally or in-person;
- Taxes, fees, and payments for government services are all examples of monetary transactions involving governmental agencies.
Future implementations of DeFi and the use of this currency for wage payments both point to increased economic activity and brisk corporate expansion. The official proceeded by saying that the organization has not yet decided whether blockchain or another technology will be used to build CBDC’s foundation.
Functionality is currently prioritized over technological sophistication. The announcement also emphasizes that CBDC will not prioritize the implementation of any web3 elements. Instead, it will prioritize enhancing the user experience and securing user data. Web3 implementation is on the agenda, however it is not a top priority at the moment.
The experts warn that taking things slowly and in a deliberate manner with numerous successive steps could be counterproductive. Many people argue that earlier attempts to introduce CBDCs failed because developers rolled out features too slowly to persuade users that the new digital currencies are superior to the ones we now have (cash or debit cards).
On the other hand, it’s crucial to consider a wide range of use cases and make sure the core feature is compelling enough. The European Central Bank should study the most successful cryptocurrencies and think about using blockchain technology to facilitate future decentralization and compatibility with existing networks. It is important to keep in mind that a growing number of EU-based businesses are now accepting cryptocurrency payments.