Bitcoin and Facebook’s Libra may quite possibly play major roles in the transition of central banks to issuance of digital currencies.
Raghuram Rajan, previously of the Reserve Bank of India, deems Bitcoin as a “speculative asset” and Libra is intended for transactions. He also stated that both of the currencies compete with the current digital currency that the central bank holds.
The appeal of digital currencies is growing on people as financial systems begin to digitize their operations as well. The concept is still under discussion, but it is a possibility that central banks will be issuing digital fiat money. People’s Bank of China is already holding trials that aim to digitalize yuan, not only in the country, but internationally.
Other countries are also considering their potential to follow suit. Britain, Japan, Sweden, Switzerland, and some countries in Europe have allied to determine the feasibility of the endeavor.
Bitcoin does not have a centralized server that governs its activity and performance, the status of Bitcoin is driven by traders, buyers, and sellers. It uses a public ledger called Blockchain, which records all transactions and makes it visible to all other investors and market participants.
Libra is developed by a team that is spearheaded by Facebook with the objective of establishing a convenient payment system. Its newly designed blockchain system will integrate a new programming language and a consensus program, while taking few characteristics of pre-existing blockchain structures.
But Libra was not as well-received due to its association with Facebook, which has faced numerous accusations of data privacy breaches and false information dissemination.
One of the concerns that digital currencies face is the wariness with the amount of information that is linked to these digital financial concepts. Private information is exchanged with every transaction and these bits of information all flow through a network and therefore raises the question as to how this data is kept safe and secured to not fall into the wrong hands.