bitcoin cash hard fork

This article is regularly updated to include the latest Bitcoin Cash fork developments.

What is the Looming Bitcoin Cash Hard Fork?

As part of the Bitcoin Cash system, the community schedules a bi-annual upgrade to keep the network up to date.

The next upgrade is due on November 15th, around 4.40pm GMT. However, there is disagreement over the upgrade itself. The split in the community is likely to create a “hard-fork,” where the blockchain splits with two different rules or “protocols.”

Background reading: What is a hard fork in cryptocurrency?

Bitcoin Cash ABC vs nChain

The dispute centers around two developer communities: Bitcoin Cash ABC and nChain.

Both aim to release a different version of the upgrade on November 15th.

The difference in opinion means this is a “contentious hard-fork.” When the upgrades are made, there will be two versions of the Bitcoin Cash blockchain, and it remains to be seen which will be the “dominant” chain.

The Argument: Bitcoin Cash ABC

One of the most prominent features of the Bitcoin Cash ABC proposal is to move beyond monetary transfers. An improvement to the scripting language may lead to the introduction of smart contracts on the Bitcoin Cash blockchain.

Further reading: What is a Smart Contract? (In Simple, Easy-to-Understand Terms)

The upgrade will also introduce “canonical transaction ordering,” which alters the way transactions are listed in a block. Bitcoin Cash ABC claims this will act as the foundation for enormous scaling potential in the future.

The current proposal maintains the current block size of 32MB, although ABC is open to increasing it in the future.

The Counter Argument: nChain

The major feature of the nChain upgrade is the quadrupling of blocksize. nChain proposes a new blocksize of 128MB, which is their solution to scaling issues.

nChain will release a “full node implementation” reflecting these changes on November 15th. nChain calls this upgrade Bitcoin SV, or “Satoshi’s Vision,” as they claim it is a true reflection of Bitcoin founder Satoshi Nakamoto’s ideals.

The Two Upgrades Are Incompatible

The two differing proposals cannot function together. So, when the two parties activate their upgrade, two different chains will be created, hence the hard fork.

Who’s in Favor of Bitcoin Cash ABC?

Software company Bitcoin Cash ABC put forward the proposal, hence the name.

Their software is used by two-thirds of Bitcoin Cash mining nodes, who simply need to upgrade the software to implement the upgrade.

As for the big name support, Roger Ver and his website bitcoin.com are vocal supporters of Bitcoin Cash ABC. Bitmain, the world’s largest cryptocurrency mining company, has also publicly stated support for Bitcoin Cash ABC.

Pre-fork trading on Poloniex showed that ABC was initially valued four-times higher than rival SV, suggesting that traders backed the ABC project. However, the two coins are now trading at near parity ahead of the fork.

Who’s in Favor of Bitcoin Cash SV

The loudest voice for Bitcoin Cash SV is Craig Wright, who has publicly declared himself as Satoshi Nakamoto in the past.

His software company nChain proposed the alternate vision, called Bitcoin SV (or “Satoshi Vision”)

The argument reached boiling-point when Roger Ver published an email reportedly from Craig Wright which read “You are my enemy… You will now discover me when pissed off.”

Bitcoin Cash also has support from the vast majority of Bitcoin Cash mining pools. Current estimates suggest that SV will command up to 72% of mining power, which could give it the edge when the fork initially happens.

Coinbase, Binance, and Ledger Support?

Two of the world’s leading crypto exchanges, Coinbase and Binance, have both expressed support for the hard fork. Although, it remains to be seen which fork they will ultimately follow.

As Coinbase explains:

“Unlike previous BCH hard forks, there is a competing proposal that is not compatible with this published roadmap. Coinbase will monitor the hard fork process and work to minimize customer disruption until the network meets Coinbase security standards.”

 

Binance didn’t comment on the contentious nature of the fork, but did express support:

“Binance would like to confirm support for the upcoming Bitcoin Cash hard fork.”

 

Hardware storage company Ledger will also support the forked coin, but clarified it would only support the dominant chain:

“Ledger will pause Bitcoin Cash service to avoid unwanted transactions until it is clear which of these chains will be the dominant one.”

 

In all cases, transactions will be paused at least an hour before the fork is due to take place (roughly 4.40pm GMT).

What Happened to the BCH Price?

Generally speaking, a hard fork often triggers a price run in anticipation of free tokens. When a hard fork occurs, holders of the coin are often granted the new forked token on a 1:1 basis.

This was the case when Bitcoin forked to create Bitcoin Cash. Everyone holding bitcoin also received the same number of bitcoin cash tokens.

Traders initially flocked to BCH in anticipation of a new, valuable forked coin.

However, that excitement has run out, with Bitcoin Cash falling almost 20% this week. After the initial gold rush, traders are contemplating the fact that vicious infighting could have a negative effect on the future of Bitcoin Cash.

Conclusion

Unless nChain and ABC come to a compromise or agreed solution, Bitcoin Cash will fork on November 15th, resulting in two separate blockchains. The dominant chain will likely be supported by major exchanges and third parties, but it remains to be seen which chain that will be.

Block Explorer will keep you updated on the developments as we move closer to the November 15th upgrade.

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bitcoin cash fork fight

It’s judgment day for Bitcoin Cash.

After a vicious war of words between the two competing sides, Bitcoin Cash will execute a hard fork today and split into two separate blockchains. By the end of the day, we may have two new cryptocurrencies on the market:

Bitcoin Cash ABC and Bitcoin Cash SV.

However, the developers behind Bitcoin Cash SV do not expect the two new blockchains to live in harmony.

Background reading: November’s Bitcoin Cash Fork, Explained

Bitcoin Cash SV: “The Intention is for Only One Chain to Survive”

Looking back to a press release issued earlier this month, the Bitcoin Cash SV camp explained clearly:

“With Bitcoin SV, we are not seeking to create a new Bitcoin variant and we are not intending to create a new Bitcoin SV token.”

The statement was issued by nChain, the software and development company behind the proposed SV upgrade. It continues:

“There will likely be a period of time before this temporary chain split is resolved, while miners are voting with their hash power.”

In other words, they believe only one chain should be allowed to exist after the fork: the longest one. That will simply be determined by how much hash power (or mining computer power) is directed to each chain.

“No Transaction Replay Protection” – a Technical Trip Wire

Transaction replay protection is a mechanism built into blockchains that makes transactions on one blockchain invalid on the other one.

Bitcoin Cash SV has not implemented this protection.

Without transaction replay protection, it means users can unwittingly lose money by accidentally transacting on the wrong chain. It also opens up holes for hackers to exploit.

It’s a sign of war from Bitcoin Cash SV. They expect the “losing” chain to peter out, with no protection needed.

If you’re a Bitcoin Cash holder, however, you need to be careful. The best advice is to keep your Bitcoin Cash safely in a wallet until the dust settles.

A Fight for Hash Power

If only one chain is to exist, it will come down to a fight over hash power. In other words, the decision lies with Bitcoin Cash miners: which upgrade will they devote their mining power to?

Indications suggest that Bitcoin Cash SV has the edge with at least 72% of estimated mining hash power compared to ABC’s 13%.

This also gives SV the potential power to initiate a 51% attack against the ABC blockchain. Craig Wright, the man behind SV has not ruled out this possibility. Miners could also mine “empty blocks” that don’t contain any transactions. It would effectively bring the blockchain to a halt. 

Further reading: BCH Fork Wars: Who’s Winning? (The Two Sides, Explained)

What will happen?

It’s still too early to tell. However, there are three possible outcomes:

  1. Only one coin survives – As Bitcoin Cash SV hopes, a dominant chain could emerge and overwhelm the hash power of the other.
  2. Two coins emerge – If hash power is shared to a viable extent, there may be two concurrent blockchains and two separate cryptocurrencies.
  3. Implosion – There’s a chance that the vicious infighting and nefarious hashing actions could kill the value of both blockchains and endanger the entire future of Bitcoin Cash.

Block Explorer will keep you updated as more news comes in.

best blockchain games

Before we get into this list, don’t get too excited about playing games as ambitious as Fortnite or Skyrim or Call of Duty. Blockchain gaming, while exciting, is still in its infancy, often based around collectibles (you’ve all heard of Cryptokitties, right?) Our aim is to begin tracking the world of blockchain gaming as it develops and see what new ideas are out there. Delton Rhodes explores. 

What Are Blockchain Games?

As the name suggests, blockchain games are any games that use blockchain technology to power some or all of the gameplay. 

It might be as simple as storing gaming items on a blockchain,  often Ethereum. Or as vast as building an entire blockchain gaming universe (see Decentraland and CryptoSpaceX below). 

Why Blockchain Games vs. Traditional Games?

Blockchain games are considered more transparent and secure than traditional games. In traditional games, everything is stored on the gaming company’s servers. 

With blockchain games, your items and progress can be stored safely and transparently on a public blockchain. 

For the first time ever, it also means you can own 100% unique digital items. Before blockchain, every digital item (like a weapon or trading card) was just a copy of something else. 

Now you can truly own something digital in a game – which opens up tons of new gaming and collectible options.

Curious? Let’s dive into some of the best early blockchain games out there.

Top Blockchain Games

The following are some of the best blockchain games out there (or in development). Some of the games in this list can’t be considered true blockchain games in the sense that they don’t yet rely solely upon blockchain technology. However, many in this list do utilize blockchain for every aspect of gameplay.

Age of Rust

Age of Rust blockchain game

Age of Rust is a dark sci-fi adventure game set in the vast expanse of the universe in the year 4424. In the game, you can explore abandoned space stations, mysterious caverns, and ruins on far away worlds. You can unlock puzzles and secrets throughout.

One of Age of Rust’s most innovative features is its blockchain-based peer-to-peer rental market that allows anyone to rent in-game assets for specified periods of time. 

The anticipated launch date for Age of Rust is late 2019, meaning it will have undergone two years of development. 

SpacePirate Games, the creators of this game, have already released a text-adventure version of Age of Rust which features Rustbits as the in-game currency. The beta version of Age of Rust offers the equivalent of four BTC in prizes. Eventually, Rustbits will be converted to ERC-1155 tokens using Enjin Coin’s smart contract to enable this functionality.

How to play: On PC when it’s released next year

No Man’s Sky

No Man's Sky crypto gaming

Okay, so this isn’t technically a blockchain game, but it does have a unique cryptocurrency twist…

No Man’s Sky contains an enormous universe for gamers. This game includes 18 quintillion randomly-generated planets for players to explore. Since the game launched in 2016, the creators have continuously added new features like base building, better ship customization, and improved graphics.

In 2018, No Man’s Sky also added multiplayer functionality. The game is available on PC, PS4, and Xbox One.

Although this is not technically a blockchain game, it does have in-game cryptocurrency rewards. What’s most interesting, though, is that the game’s creators didn’t add this. Instead, two avid fans (Jon Creasy and his brother) hid two clues in separate locations within the game.

The first player who can find both will have the ability to access the secret phrase (seed) needed to unlock a wallet containing around $30 worth of BTC.

How to play: purchase for PS4, XBox One, and PC

Gods Unchained

Gods Unchained

Gods Unchained, mentioned in our recent article about dapps, continues to gain attention from gamers.  According to the project website, Gods Unchained is the first-ever blockchain esport. This game has a multiplayer mode where users can battle each other as well as trade, sell, and store gaming cards. 

According to the future roadmap, there will be a Gods Unchained world championship sometime in the near future. As of November 13, 2018, around $370,000 has been raised for this event. 

How to play: online (requires Meta Mask to access and ether to make purchases)

CryptoSpaceX

CryptoSpaceX blockchain game

CryptoSpaceX is a game where you can explore the universe. The game is built on the blockchain, and all in-game elements are assigned digital ownership to the players.

Users can engage in detailed and strategic planet vs. planet battles to loot stardust. With this game, you can also build new starships as well as upgrade and customize your star fleet.

Players can also compete in various challenges and tournaments in a special arena and travel to Vegastar (built in the Fabula galaxy) to win special prizes.

Episode I of the game launched in June 2018. Episode II is expected to be ready to launch by December 2018. According to the project website, the game will eventually include support for mobile gaming functionality.

CryptoSpaceX is unique due to its extreme scarcity of tokens. While similar games might have millions or even billions and claim to be scarce, CryptoSpaceX will only ever have 4000 SpaceX tokens. 3,700 were available in the presale which ended in Ju

ne 2018; however, only 773 were sold then. To avoid centralization of the token supply, each user was limited to a maximum of 10 SpaceX tokens.

How to play: As part of Episode I, purchase starships online (requires MetaMask)

CubeGo

CubeGo

CubeGo is a game in which you can use 3D building blocks to build your very own personalized 3D models called Cubegon. 

The mission of this game is to enable players to ignite their creativity and imagination by building 3D characters. According to the project website, “They will be the soldiers standing by your side in the face of all adversary and earning you significant rewards.” 

With CubeGo, as with most blockchain games, you have full ownership of your creations. Similar to collectible games, each Cubegon (3D model) is unique. The game even provides blockchain-backed copyright ownership for creators. 

CubeGo players can use arenas as the playground for demonstrating the power of their Cubegons through 3D battle experiences. 

The token presale for CubeGo starts on November 24, 2018. In December 2018, CubeGo will launch Cubegon Building & Marketplace. For 2019, there are several anticipated milestones in the future roadmap, including arena opening and ranked battles. This project has established several big partnerships. Some include Kyber Network, Zilliqa, and Coinbase Wallet.

How to play: register for presale

EOS Knights

EOS Knights blockchain mobile game

EOS Knights is the first mobile game (available on iOS and Android) that runs on the EOS blockchain. This game allows users to complete tasks like collecting materials, crafting items, adopting pets, and trading items using EOS. 

Even though the game only launched in September 2018, the team behind it has been busy making a variety of major updates. 

For example, in November 2018, EOS Knights is adding much-improved functionalities like multi-play boss content (four players), additional boss content, six-level Items (Destructive), and set items (new category). 

How to play: download on the Apple App Store or Google Play

Axie Infinity

Axie Infinity

Axie Infinity draws its inspiration from Pokémon and Tamagotchi games. It is a decentralized game that runs on the Ethereum blockchain. Axie Infinity allows you to breed, raise, and battle fantasy creatures known as Axies. 

Similar to other blockchain games, Axie Infinity utilizes scarcity as a key component. The four levels of rarity are Common, Rare, Ultra Rare, and Legendary.

There are more than 500 Axie body parts available, with additional ones being revealed later. Axies’ body and parts are grouped into classes including Beast, Plant, Bug, Bird, Reptile and Aquatic. 

This means the combinations are limitless. Axie Infinity also features a 3v3 battle mode. As of November 13, 2018, there have been close to 11,000 Axies created and over 93,000 battles.

How to play: online (requires Meta Mask)

Decentraland

Decentraland

Decentraland is not a game as such, more a platform for lots of future virtual reality (VR) blockchain games.

Decentraland provides a VR platform for creating, experiencing, and monetizing content and applications. Unlike most projects that are making blockchain VR games a more distant goal, creating a VR world is Decentraland’s main focus. According to the project website, users can go to a casino, watch live music, attend a workshop, shop with friends, start a business, test drive a car, and visit an underwater resort within the game.

Decentraland even provides an SDK (software developer’s kit) that allows anyone to start developing games and applications for the platform.

The Decentraland protocol features three layers: consensus layer, land content layer, and real-time layer. Designers can use SketchUp and/or Blender to create models before importing them to Decentraland. This project has been around since 2015 and uses MANA as its in-game currency.

How to play: start developing games and building virtual worlds online

 

Beyond the Void

Beyond the void blockchain game

Beyond the Void is a unique combination of strategy, action, and one-on-one competitions. This game brings the multiplayer online battle arena (MOBA) genre with its real-time strategy (RTS) origins back together in outer space.

Beyond the Void uses Nexium (NXC) as its in-game currency. Within the Nexium ecosystem, you can find games developed and/or published by B2Expand (creators of Beyond the Void), a decentralized shop for all in-game items, and Ethereum tools for developers.

B2Expand is actively working to expand collaboration within the blockchain gaming space. One cool fact is that, if you own a Crystalibur ship in Beyond the Void, you also own an Amaranthe card in the Spells of Genesis.

B2Expand also organized the first annual Blockchain Game Summit in Lyon in France in September 2018.

How to play: play on Steam

EtherQuest

Etherquest blockchain game

EtherQuest is a fantasy role-playing game powered by the blockchain. Mighty warriors from multiple worlds clash in a struggle for supremacy. The warriors range in rarity, from “common” to “legendary.” Each rarity type comes with a unique combination of stats and bonuses. 

Game activities include summoning, arena, and tournament. To play this game, you’ll need to have a MetaMask wallet. Luckily, for new players who want to get started learning this game, EtherQuest provides a comprehensive gameplay guide.

How to play: online (requires Meta Mask)

Spells of Genesis

spell_of_genesis blockchain game

Spells of Genesis is a mixture of various game types. It is a trading card game (TCG) that involves deck collection and strategy as well as arcade-style gaming elements. With this game, you can collect, trade, and combine orbs to build the card decks.

Then, you can put your orbs to the test against various opponents while exploring the fantasy realm of Askian.

BitCrystals (BCY) are the digital assets that serve as the game-fuel and the premium in-game currency of Spells of Genesis. 

Compared to other blockchain games, this currency is relatively well-established. The BCY crowdfunding campaign took place back in summer 2015. Spell of Genesis cards are digital assets based on Counterparty, which is a platform that allows developers to create custom tokens for the Bitcoin blockchain.

How to play: on PC, download iOS app, download Android app

FirstBlood

FirstBlood blockchain game

Not a game as such, but FirstBlood is aiming to change the future of esports betting. Most notably, FirstBlood provides a platform for players who want to automate their tournament play and payout distribution. In fact, this blockchain-based platform even automates registration, bracket management, and scorekeeping via technologies like smart contracts and oracles. 

Why is this a significant step forward for esports? Essentially, this platform reduces (or even eliminates) the groundwork involved with launching an esports tournament. This means that FirstBlood can support small tournaments with low buy-ins on any given day as well as large-scale, high-profile competitions. The best thing is that this can all be organized via a trustless environment.

DreamTeam

DreamTeam is another popular option for esports. According to ICObench, “DreamTeam will offer esports player and teams recruitment and management tools for the most popular PC titles CS:GO, LoL, DOTA 2, PUBG, Overwatch and more. Amateurs and professionals can create accounts for players with rankings taken directly from their games.” 

It’s also important to note that every transaction on the platform will eventually require the use of DreamTeam tokens. 

As of November 2018, the DreamTeam platform still hasn’t launched key features like its management tool or the ability for players to earn funds through gameplay. 

Nevertheless, DreamTeam is aiming to use its native token for smart contracts that can facilitate tournament prize payouts as well as paid platform features (i.e. premium accounts). The native token could also potentially be used for other things like buying games, software, hardware and more via the DreamTeam platform.

Conclusion

It might take some time before large-scale applications like real-time video can be powered by blockchain. Therefore, to move popular multiplayer video games like Fortnite into a blockchain-based game, some serious technical advancements would need to be made. 

However, there are already a few companies trying to do just this. For example, MagnaChain is a separate blockchain being developed specifically for video games. The company behind the project claims its network is capable of handling up to 100,000 transactions per second. Earlier in 2018, its testnet handled over 13,000 transactions per second. 

It will be interesting to see how the future of blockchain gaming plays out. Will the user adoption of blockchain games ever surpass that of traditional games? This might be too early to tell. As blockchain scalability increases, we could very well see the emergence these and other innovative blockchain games that offer improved user experiences over traditional games.

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bitcoin cash ABC

Bitcoin Cash is about to tear itself in two.

On one side, Bitcoin Cash ABC.

On the other, Bitcoin Cash SV.

Sound messy and confusing? Well, it is.

Bitcoin Cash is on the brink of another hard-fork – where a blockchain splits in two, potentially creating two separate cryptocurrencies.

Background reading: What is a hard fork in cryptocurrency?

Early signs suggest that Bitcoin Cash ABC has the edge and will become the dominant chain. But what is Bitcoin Cash ABC? Who’s behind it? And what changes will it bring? Let’s dive in.

What is Bitcoin Cash ABC?

1. The “Best Money the World Has Ever Seen”?

Bitcoin Cash ABC has a grand vision of creating the best money the world has ever seen, according to their roadmap. In very simple terms, it’s an upgrade to the existing Bitcoin Cash system.

That in itself isn’t unusual. Bitcoin Cash developers schedule bi-annual upgrades to keep the system up-to-date. In the past, the community has mostly agreed on how to move forward.

But now there’s a major divide in opinion, which could lead to two separate cryptocurrencies.

2. Who’s in Favor of Bitcoin Cash ABC?

Software company Bitcoin Cash ABC put forward the proposal, hence the name.

Their software is used by two-thirds of Bitcoin Cash mining nodes, who simply need to upgrade the software to implement the upgrade.

As for the big name support, Roger Ver and his website bitcoin.com are vocal supporters of Bitcoin Cash ABC.

Bitmain, the world’s largest cryptocurrency mining company, has also publicly stated support for Bitcoin Cash ABC. Bitmain is reportedly marketing its new miners heavily at mining farms for the upcoming hard fork. 

Exchanges Binance and Coinbase have expressed support for the hard fork and cold storage company Ledger will support the dominant chain (likely ABC).

3. And Who is Against Bitcoin Cash ABC?

The loudest voice against Bitcoin Cash ABC is Craig Wright, who has publicly declared himself as Satoshi Nakamoto in the past.

His software company nChain proposed the alternate vision, called Bitcoin SV (or “Satoshi Vision”)

The argument reached boiling-point this week as Roger Ver published an email reportedly from Craig Wright which read “You are my enemy… You will now discover me when pissed off.”

Bitcoin Cash SV also has support from mining company CoinGeek.

4. The Technicals of ABC: Same Block Size, More Features

From a technical viewpoint, Bitcoin Cash ABC aims to maintain the current block size of 32MB. However, they will introduce “canonical transactions,” which allows for enormous scaling.

As explained in the ABC roadmap, “there are some technical improvements that must be made to enable Bitcoin Cash to scale to a world-wide currency.”

In a nutshell, Bitcoin Cash ABC is about laying groundwork for huge scaling in the future. On the flip side, Bitcoin SV wants to go ahead and raise the block size immediately to 128MB, claiming “the future of Bitcoin is big blocks, big business, and big growth.”

Another technical upgrade for Bitcoin Cash ABC is a new opcode that will introduce the potential for cross-chain atomic contracts.

5. Bitcoin Cash ABC Has the Edge According to Pre-Trading at Poloniex Exchange

Poloniex took a unique position by allowing users to trade both tokens ahead of the official hard fork.

Early trading activity put Bitcoin Cash ABC at five times more valuable than SV. 

Bitcoin Cash ABC has a price of $505.

Bitcoin Cash SV has a price of $104.

Of course, this is all subject to change as we move closer to the hard fork implementation. 

Countdown to November 15th

The hard fork is due to take place on November 15th, unless the two communities can come together and reach an agreement.

If no compromise is reached, we will likely see the emergence of two new cryptocurrencies.

Block Explorer News will keep you up to date in the coming week as the clash evolves.

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central bank digital currencies

When Venezuela created its own central bank digital currency (CBDC) in an attempt to stabilize its faltering economy and out-of-control inflation, it posed some interesting questions. 

Are CBDCs a viable financial solution for failing economies?

Could this be something that every country should implement?

Does the centralization of CBDCs go against everything cryptocurrency stands for or are they the future of widespread crypto adoption?

It’s not just failing economies looking into CBDCs either. The Bank of England released a paper discussing the merits of a national cryptocurrency. Switzerland requested a study on the benefits of launching an e-franc and Canada published a framework for a CBDC.

Is there a future where every country launches its own digital currency?

What is the Definition of a CBDC?

A central bank digital currency is a cryptocurrency issued and controlled by a government, central bank or federal regulator. It’s basically a homegrown cryptocurrency dedicated to and ran by a country.

One of the main drawbacks of widespread crypto adoption is the lack of regulatory control. The implementation of nation-state CBDCs across the board could immediately fix those problems. They could be fully regulated by the state. CBDCs are not decentralized like many cryptocurrencies and represent real money in a digital way.

Governments or central banks would become not just the issuer of the digital currency, but also the regulator. It may offer the security and stabilization that is sometimes lacking with fluctuating digital currencies such as bitcoin. 

Venezuela Launches Petro CBDC

When news broke that Venezuela was poised to launch its own CBDC called the Petro, it was met with varying levels of suspicion and controversy. When announcing the launch of the petroleum-pegged Petro, Venezuelan President Nicolas Maduro took a swipe at the US and laid out his vision:

“They’ve dollarized our prices. I am petrolizing salaries and petrolizing prices. We are going to convert the petro into the reference that pegs the entire economy’s movements.”

venezuela petro

However, the petro cryptocurrency is shrouded in controversy. It has been called a scam by the American authorities, who claim the country is using the petro to skirt US sanctions. Many crypto-enthusiasts have also slammed the idea due to its centralized nature. All of these criticisms are valid. 

But could this concept work for other nations who are dealing with collapsing economies or would it spark the end of the decentralized nature of cryptocurrencies themselves?

Pros and Cons of Implementing a Central Bank Digital Currency 

There are arguments on both sides of the coin in regards to the adoption of central bank digital currencies. 

The opinions largely fall into two categories: long-term crypto users who are opposed to the decentralization of crypto; and those who want to see wider adoption and integration of blockchain technologies and CBDCs to bring together a coordinated effort to regulate the industry moving forward.

The Pros of Using a CBDC

Those who seek greater regulatory measures applied to the cryptocurrency industry such as governments, central banks, and some potential investors are more open to CBDCs. Many believe that the pros outweigh the cons.

  • Boosting the economy – The Bank of Canada Economist, Mohammad R. Davoodalhosseini, claims that even large economies such as Canada and the US could greatly benefit from the implementation of a CBDC. Research from the Bank of Canada (BOC) showed that a CBDC “can lead to an increase of up to 0.64 percent in consumption for Canada and up to 1.6 percent for the US, compared with their respective economies if only cash is used.”
  • Stabilizing failing economies – As we have seen with the implementation of the petro in Venezuela, some economies in the oil trade who are dependent and attached to the US dollar can use a CBDC to reinvigorate their economy.
  • Greater regulatory cohesion – If the people who are issuing the CBDC are the same ones regulating it, greater regulatory cohesion will naturally follow. If a handful of countries adopt CBDCs and collaborate together in a coordinated effort, regulating the industry would be much easier than present.
  • Easy access and confidence – The implementation of a CBDC could help to speed up the process of widespread crypto adoption as the risks currently associated with using crypto would be less if backed by an entire country and a central bank. It would create more confidence in the market for investors.
central bank digital currency countries
A map of countries with an active state-issued cryptocurrency. Credit: Coin Telegraph

The Cons of Using a CBDC

Although the introduction of a CBDC seems like a great idea from one point of view, some central banks think they won’t work. Even the Bank of Japan’s (BOJ) deputy governor, Masayoshi Amamiya has criticized the idea of central bank digital currencies. Here are some of the cons involved with issuing a CBDC:

  • Expensive setup costs – One of the major concerns for Masayoshi Amamiya and other central banks is that creating a CBDC is a costly affair. It’s not only banks that would be expected to implement new technologies but also the entire public sector, middle-men, and customers. As a CBDC is a state-run enterprise, taxpayers would be footing the bill.
  • Loss of financial privacy for users – The most discussed negative issue against CBDCs is the centralized nature of the concept. Most long-term crypto enthusiasts and other anti-establishment types champion bitcoin and other cryptocurrencies because of their privacy and independence from central banks. A CBDC goes against that philosophy.
  • Knock-on effect to pre-existing financial systems – Although introducing a CBDC may work for failing economies, it’s not efficient for larger nations that currently have a massive presence in the global financial markets and successful pre-existing financial systems. 

The Imminent Future of CBDCs

At the time of writing, the only nations using a CBDC are Senegal, Tunisia, Marshall Islands, and Venezuela. Although Iran has also been researching the possibility of introducing one for similar reasons to Venezuela. 

Central Banks might well feel they are being left behind in regards to distributed ledger technology that could very well revolutionize the global financial markets as we know it. Thailand is one such nation that is embracing blockchain and considering its own CBDC. When recently talking about the issue with the Bangkok Post, a spokesperson for The Bank of Thailand said:

“Technological changes are having a major impact on financial services. The Bank of Thailand and local financial institutions agreed to launch a project to raise technological readiness in adopting new financial technologies to enhance operational efficiencies. Creating an ecosystem conducive for collaborative learning in technology will be an important driving force towards a digital future.” 

Although Thailand is currently only in the planning stage, they believe that by early next year, their very own central bank digital currency will be unveiled. 

Conclusion

Central bank digital currencies are an interesting alternative for failing economies with struggling financial systems, but not so much for economic powerhouses that already dictate the global markets at this current time. 

However, the evolving nature of the financial markets and distributed ledger technology, plus pressure from governments, central banks and high places who are pushing for greater regulations and cohesion in the crypto marketplace, means that a CBDC could be coming to a country near you sooner than you think. 

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