Wholesale Based CBDC
Digital Currency is now a significant part of the economy and is soon to replace a significant portion of physical currency. Efficiency, security & convenience — these three fundamental features are shaping the future of digital currency. And the result is here, CBDC Bangladesh.
CBDC stands for Central Bank Digital Currency and the name is quite self-explanatory. A nation’s central bank-issued digital currency or government-backed digital currency is called CBDC. That means only ‘Bangladesh Bank’ have the authority to produce and circulate this digital currency in Bangladesh rather than a commercial bank. As the national bank is the sole authority of this digital currency, it’s centralized and it’s also regulated by the government. So, there is unlikely to be any risk of fraud or complications like cryptocurrency. With CBDC, there will be no hassle of storing money and you can say ‘bye’ to all the complex transaction processes. Handling your money is now easier than ever! Building a sustainable infrastructure of CBDC won’t just revolutionize the financial transaction methods, it will also unveil new opportunities for businesses and enterprises.
More than 100 countries that account for a significant portion (over 95%) of the world’s Gross Domestic Product (GDP), are currently considering the potential and examining the possibility of implementing a Central Bank Digital Currency (CBDC). As of this day, the number of countries that launched a digital currency is 11. 18 countries are observing the CBDC pilot program, 32 are developing the infrastructure, 39 countries still research to figure out the possibility, and 2 countries canceled their venture in this direction. In 2023, over 20 countries are assumed to begin the piloting stage. So, it’s safe to say that digital currency like CBDC is the future of a financial establishment. Will CBDC replace cash? Well yes, CBDC has the potential to be a sustainable alternative to physical currency in Bangladesh's economy. In a situation like this, it’s important to adapt to the changes and keep up with the pace in this era of the financial revolution. That’s where we arrive — Bits and bytes, one of Bangladesh's fastest-growing CBDC solution providers!
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Bits and Bytes was established on” date of establishment” by “Name of the founder” with a vision to provide top-notch solutions to all kinds of CBDC-related issues. When it comes to adapting to a new thing, complex challenges are expected to appear at every step of the journey. Especially, when that includes the use of complex ideas like Web 3.0, AI, Machine learning, Bigdata analysis, Decentralized application, and many more! That’s why you need expert help to keep things running smoothly. We have a group of experts who understands the ABCs of CBDCs and know how to make them work. Here at Bits and Bytes, we deal with the toughest challenges by executing smart and effective strategies that will benefit our clients. As CBDC Technology Solution Provider, we are here to help you build an efficient financial ecosystem where all parties can be equally benefited. Our service is based on the state of the art blockchain technology that ensures transparency, security, and decentralized transactions. We can help you design and manage your own financial ecosystem just the way you need.
The concept of digital currency and its use is not that new. As a matter of fact, there are over thousands of digital currencies existing already. Nowadays it’s hard to find someone who hasn’t heard about cryptocurrency. There are lots of discussions on the merits and demerits of different cryptocurrencies, especially Bitcoin. So, it’s quite normal to have second thoughts about CBDC. And then there is this question, ‘why do we need another digital currency when there are so many existing ones’? Well, the answer becomes quite apparent if you dive a little deeper and the debate on CBDC vs cryptocurrency exists for a reason. One of the major issues of cryptocurrency is the fluctuation in the market. One day the price of crypto goes up and the next day it can become less than half. The concern is always there and no one can deny that. Then again, the use of this decentralized digital currency is not equally accepted in every country and in every financial institution. However, the story will be different in terms of a CBDC. A CBDC will be a central bank-issued currency that works based on authorized private blockchains. As the currency will be government issued, there won’t be unaccounted fluctuation issues and acceptability won’t be an issue. People will be able to use a CBCD just like your existing physical currency.
Physical currency such as notes and coins have been the medium of financial transactions for the last couple of centuries. However, physical currency comes with certain problems that we can’t avoid in most scenarios. It’s not just the physical currencies, some of the existing digital currencies like Bkash & Rocket also have significant issues. Some of the major problems that inherently come with physical currencies and the problems regarding the existing establishments are -
- Security risk: The security issue is the first thing that comes to mind when we think about the problems of physical currency. With physical currency, there is a huge possibility of theft, fraud, and counterfeiting. All of us are aware of the incidents around us regarding physical currency while some of us have been direct victims!
- Not cost-effective: Producing and managing physical currency, such as banknotes and coins, can be a costly affair. Governments and central banks have to spend a significant amount of money on printing, minting, and transporting banknotes and coins. For example, The cost of printing a 1000 taka note is 8 taka, while minting a 5 taka coin costs almost 2 taka.
- High transaction cost: At present, a surcharge of 100 takas is necessary for transferring one lac taka using the real-time gross settlement service. This might seem like a small amount but from the macro perspective, we are spending hundreds of crores of taka in this current system. Existing e-banking and mobile banking services are also charging quite a lot!
- Not Convenient for large transactions: When it comes to large transactions, relying on physical currency can be troublesome and unfeasible. Carrying a huge amount of banknotes or coins is not just challenging, it also poses a great risk.
- Difficulty in tracking: Tracking the use of physical currencies is quite difficult and close to impossible. That’s why this can be used for illegal activities. Even though there are existing platforms (like Bkash and Rocket), they aren’t accepted everywhere.
- Acceptability issues: Physical currency is not accepted universally, and certain merchants may decline to receive cash payments. This can be inconvenient for those who primarily rely on physical currency as their mode of payment.
CBDC is expected to put an end to all these issues. Switching to CBDC will help us get rid of almost 80% of the money-related issues that we currently have. Here’s an idea of how a full-fledged CBDC infrastructure will solve different issues -
- Increased efficiency: By enabling real-time payments and removing intermediaries, CBDC can expedite transactions, making them more efficient and convenient. Currently, transferring one lac taka via the real-time gross settlement service takes around 30 minutes, assuming that the transaction request is made between 10 am and 3 pm. With CBCD, the required time will significantly decrease.
- Available for everyone: Central Bank Digital Currency (CBDC) can enhance financial inclusion also. People who don’t have a bank account or are underbanked will be offered access to digital payment systems as well.
- Easy to track: As CBDC is a blockchain-based digital currency, it will be easy to track records and transactions on the blockchain, providing greater transparency and traceability. This will significantly decrease illegal dealing and money laundering.
- Enhanced monetary policy: Central Bank Digital Currency (CBDC) can give central banks greater authority over the money supply, allowing them to implement monetary policies more efficiently and effectively.
- Lower transaction costs: By eliminating intermediaries, such as payment processors and clearinghouses, CBDC can lower transaction costs to the bare minimum.
As we move towards a more digitalized financial system, it is essential to understand the ins and outs of central bank digital currency (CBDC) and the implications it may have on monetary policies in the future. Gaining knowledge about CBDC and related topics such as CBDC payment systems, CBDC technology, CBDC implementation, CBDC payments, CBDC blockchain technology, CBDC applications, CBDC sandbox, and CBDC offline payments is crucial for making informed decisions regarding financial investments and operations. At Bits and Bytes, we recognize the significance of CBDC and its potential to revolutionize the financial ecosystem. That's why we are committed to providing comprehensive resources and assistance to help individuals and institutions navigate this evolving landscape. Our experts are available to answer any questions you may have and provide guidance on establishing a sustainable and efficient financial infrastructure for the future. By staying informed about CBDC and its various aspects, you can take conscious steps toward building a better financial system. At Bits and Bytes, we are dedicated to helping you succeed in this endeavor.
Nikolas Brooten is a highly experienced subject matter expert in the field of CBDC, with a deep understanding of digital currencies and their underlying technologies. He has extensive knowledge of blockchain and distributed ledger technology, and is well-versed in the regulatory, economic, and technological aspects of CBDC. With his expertise, Nikolas has played a key role in the development of CBDC solutions and has advised governments and financial institutions on their implementation.
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