How this digital currency will transform the world and benefit cashless societies

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Over the past two years, I have worked with my team at Broxus to develop the infrastructure necessary for central banks to deploy digital versions of their currencies. As we do this work, and as other projects have engaged in similar endeavors, the dialogue around CBDCs has taken on a kind of life of its own, tinged with misconceptions about what central bank digital currencies (CBDCs) are. ) and their purpose.

Essentially, CBDCs are digital versions of a country's fiat currency that are pegged at a 1-1 ratio to the original currency. For example, if the United States were to release a CBDC, it would be in the form of a digital dollar which is always equal to its fiat counterpart. Although CBDCs are related to cryptocurrencies and blockchain technology, some key distinctions exist.

CBDCs are, by definition, recognized digital legal currencies. This means that, unlike other similar digital assets like stablecoins, CBDCs have the same legal weight as fiat currencies. This is important because one of the main drivers for the expansion of CBDCs is the global shift to cashless societies. As more and more societies become increasingly cashless, the current economic infrastructure struggles to support local and international economies. CBDCs are a potential way to address these issues.

Much of the disconnect is due to the perceptions of many regarding cryptocurrencies and the association that CBDCs have in the public eye with cryptocurrencies. The truth is, while cryptocurrencies remain primarily speculative, CBDCs are something else altogether. Here, speculation plays no role. CBDCs, if properly instituted, would be able to optimize financial systems that have become obsolete and do not meet the needs of the world's most financially vulnerable demographics.

While the value of cryptocurrency is often tied to future developments and use cases, with CBDCs the value is here and now. The usefulness of these digital currencies is something real, something that fills gaps that are palpable in the world right now. I believe that the framework in which we discuss CBDCs needs to change so that ongoing efforts to weave this technology into the fabric of the global economy can bear fruit.

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The social security systems of the 19th and 20th centuries all required the construction of an important state body to redistribute wealth. These bloated governance structures have generally been unable to adequately assist those in the most vulnerable spheres of society. To address this issue, an experiment was conducted in Finland that aimed to provide Universal Basic Income (UBI) to people who are usually unemployed. Rather than using a welfare model, benefits were paid in Finland through a direct cash deposit of €560 each month. On the one hand, this has provided direct support to those in need and, on the other hand, has reduced the costs of collecting, accounting and spending funds which are high in social assistance programs.

The end results of the Finnish experiment are now known, and the findings are intriguing: UBI in Finland resulted in a modest increase in employment, vastly improved material well-being outcomes for recipients and an increase in positive results...