As the world gradually moves to digital transactions, Bitcoin is also earning praise from many institutions and personalities. The flagship digital token, Bitcoin, has been commended by Fabio Araujo, a director at the Brazilian central bank.
Araujo describes Bitcoin as a tremendous financial innovation that birthed a new technology, Web3. The bank executive showers praise on Bitcoin for the creation it has brought to the financial sector.
Araujo on the Evolution of Currency
The Brazilian financial expert revealed that the emergence of Bitcoin was what sparked the development of Web3 technology. Araujo added that the economic landscape is rapidly changing with the growth and adoption of disruptive digital tokens.
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According to him, cryptocurrencies have changed how people transact and pay for services. Despite the availability of traditional financial institutions, digital asset companies are now the most sought-after regarding funds transfer.
Moreover, the central bank chief disclosed that the new digital reality is driving research by regulators into adding more features to the central bank’s digital currency (CBDC).
Speaking at an event at the Sao Paulo Business School, Araujo noted that governments could not afford to leave digital assets in the hands of private entities. The Brazilian government has a unique strategy of what it wants to achieve using Bitcoin, Web3, and Blockchain technology.
According to the central banker, Brazil started accelerating its plan in 2009 after the launch of the Bitcoin distributed database technology. This was to enhance the development of Web3 using the Proof-of-Work (PoW) protocol on Bitcoin.
Araujo further stated that the technology existed long before the emergence of Ethereum. It comes with innovative contract platforms that enhance the operation of the financial sector.
Central Banks Exploring E-money
Central banks worldwide are grappling with contending with the growing influence of digital coins in the transactions people do daily. As a result, financial regulators developed the central bank digital currency (CBDC) concept. Reports indicate that about 89 countries are exploring using CBDC as their version of virtual currency.
The future of money is digital, and countries are scrambling to ensure they are part of the frenzy. Financial analysts have warned that cryptocurrencies may displace the traditional financial sector. This gave rise to the regulator’s quest to push for the development of a CBDC to thwart the growing influence of privately issued digital assets.
Reports from countries working on CBDCs show that they have moved from the conceptual stage and are now at the practical level. Central banks are trying to become familiar with all aspects of digital currencies.
According to financial experts, the decentralized finance system is a disaster. This can be averted if countries build on their currency’s virtual version and issue it for use. By backing CBDC with a national fiat currency, central banks will edge out the use of crypto assets, all things being equal.
The move to develop CBDC is gaining momentum because of the growing significance of decentralized crypto assets.