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What is holding up the development of a digital dollar?

  • A golden year for the leading cryptos
  • Blockchain is the future of fintech
  • The dollar remains the world’s leading currency
  • Advances in the digital dollar
  • Snoozing leads to losing

In the course of 2021, China will beta test a digital. Although it has not yet been officially launched, Chinese online retailer JD.com (NASDAQ 🙂 announced in November that it would accept e-CNY for payment on its platform during Singles Day. As of November 11, more than 100,000 customers were reportedly using the digital version of the currency.

Countries around the world have discussed plans to adopt fintech through the adoption of digital currencies. The US Federal Reserve and the US Treasury Department have examined the steps necessary to digitize the dollar. In one of his post-FOMC press conferences, Fed Chairman Jerome Powell told markets that the single most important factor in creating a digital dollar is, “do it right. “

But government agencies are moving at a snail’s pace. The US is already a digital economy in many ways, with credit and debit cards replacing cash. Paying by smartphone has also established itself. Fewer people now carry cash and coins have lost their importance.

At the same time, rising prices due to inflationary pressures make it hard to believe that the largest U.S. denomination in circulation is the $ 100 note. It is only a matter of time before the US releases a digital dollar. Still, the world’s leading economy seems to be lagging behind other countries in adopting fintech.

This is what awaits you in this article

A golden year for the leading cryptos

Although and, the cryptocurrency leaders, saw bearish reversals on their daily charts on November 10 on December 10, leading to lower prices, they were still posting impressive gains in 2021.
What is holding up the development of a digital dollar?, Crypto Trading News
Source: Barchart

The graphic above shows that Bitcoin closed 2020 at $ 28,986.74. It was the leading one at $ 46,632.96 on December 19 Cryptocurrency 60.9% higher in 2021.

What is holding up the development of a digital dollar?, Crypto Trading News

Source: Barchart

The graphic shows that Ethereum did, rising from $ 738.912 on December 31, 2020 to $ 3,905.221 on December 19, 2021. Ethereum moved over 5.28 times higher that year.

Meanwhile, the total market cap of the crypto asset class at the end of last year was $ 767.482 billion. At $ 2.203 trillion on December 19, it was more than 2.87 times higher, outperforming Bitcoin but underperforming Ethereum this year.

The bottom line is that the asset class has increased its critical mass. While the growth is likely a sign of a decline in confidence in a wide variety of cryptocurrencies, it is also a comment on the rise of global fintech, which is replacing the financial status quo.

Although cryptocurrencies have a growing number of supporters, they also have a number of critics. Emotions are high when it comes to the emerging asset class. Global currencies with values ​​determined solely by buying and selling in the crypto market are depriving governments and central banks of the power that can increase or decrease the supply of money to stimulate or stifle economic growth.

The evolution of the crypto revolution has created an ideological divide that places libertarianism against the status quo that supports government and traditional banking control of domestic and global financial arenas.

Blockchain is the future of fintech

While there can be an emotional divide with cryptos, there is widespread consensus about blockchain. A blockchain is a system of recording information that makes it difficult or impossible to modify, hack, or defraud the network. Each block in the chain contains a number of transactions, and each time a new transaction occurs, a record of that transaction is added to each participant’s ledger.

Blockchain technology was first described in 1991 by Stuart Haber and W. Scott Stornetta, two researchers who tried to implement a method to prevent the manipulation of document timestamps. Blockchain and cryptocurrencies go hand in hand as the elusive Satoshi Nakamoto’s original Bitcoin whitepaper created the first blockchain database.

Since blockchain technology was described in 1991, it is clear that it preceded cryptocurrencies. Still, digital tokens have made it the backbone of finance as blockchains improve transaction speed and the efficiency of records. In recent years, companies and governments have invested massive amounts of capital in the introduction of fintech and blockchain technologies.

The dollar remains the world’s leading currency

It is the world’s reserve currency, which means that central banks, governments and monetary authorities around the world hold US currency as a reserve. Reserve currencies are freely convertible, stable and reflect the economic landscape of the country that issues the legal tender.

Like all national currencies in circulation today, the US dollar is a fiat currency, meaning it derives its value solely from the full trust and creditworthiness of the United States of America. The government can increase or decrease the supply of dollars to cope with economic change. Governments tend to work together in the interests of stability in the currency markets. They routinely step in and buy or sell dollars, euros, yen, pounds and other currencies to prevent extreme volatility as the global payments system relies on exchange rate stability.

Technology has changed most aspects of our lives over the past few decades. Fewer people now carry cash and change in their pockets; they pay for goods and services with credit and debit cards. In addition, it is impossible to pay for e-commerce products with bills and coins.

Advances in the digital dollar

The US Federal Reserve has been investigating the creation of a digital dollar. The newly nominated Fed Vice President Lael Brainard has urged the central bank to urgently develop a digital US currency. In July she said that she:

can’t understand why the US is not actively developing central bank digital currency while China and other countries are. “

However, US Treasury Secretary Janet Yellen remains undecided. Recently she said:

I see both advantages and disadvantages in doing it. And my own opinion is not formed about it. “

While the Fed has been researching the potential of a digital dollar, there has been no real progress in adopting fintech and developing the technological, financial revolution. The US may be the richest country with the most influential fiat currency, but the lack of progress and consensus is worrying as other countries are on the verge of releasing digital currencies.

Snoozing leads to losing

The Chinese economy has grown so much that it is now challenging the US for world leadership. China has already entered the second phase of cross-border digital yuan studies. China and Hong Kong are both testing the use of the digital yuan.

As China and other countries the Blockchain-To adopt technology and digitize its currencies, the US risks being left in the dust. Chinese officials are calling for the digital yuan to serve as the regional currency across Southeast Asia, threatening the dollar’s position as the world’s reserve currency.

The US is now facing the need for a reactive rather than a proactive approach, with Feds, tax officials and elected leaders remaining neutral. If they wait too long, the power of the US currency could weaken. When it comes to advances in technology, you tend to get lost in snooze.

The rise of cryptocurrencies is a trend that warns that more and more people are losing confidence in fiat currencies. However, it is also a sign that fintech is the technological evolution of finance. The US must get off the ground quickly with a digital dollar program or risk losing its status as a global reserve currency.

Source: Crypto News Deutsch

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