Talk about an official state launched cryptocurrency or CBDC (Central Bank Digital Currency) and the discussion invariably, centers around the Chinese Digital Yuan. Yes China did take the lead in planning and executing its plans for a CBDC. The Digital Yuan that many of us refer to it, is currently in the pilot testing phase. Having said that, many nations across the globe are seriously working on a CBDC of their own.
The initial talk was that any official crypto launched by China, would have limited usage within the country. That was yesterday but we now know for sure that, the Digital Yuan project has sets its sight on a more global role. We will now talk about international acceptance of a Central Bank Digital Currency, issued by any nation – not limited to China.
If we talk about conventional money, it is generally not the norm to refuse any specific currency. Exceptions are obviously made when a nation, has a very dilapidated economy or its currency is hugely devalued. Currency from China, US, Germany, Japan, EU, France, Hong Kong, Singapore, Australia and at least a dozen more – are dominant in international trade.
Experts agree that nations that do launch their official cryptocurrency, generally plan to keep it on par with their conventional currency. Handling, transferring and maintaining cryptocurrency is a lot more economical than, working with paper money. This is better understood if we consider the process involved in printing paper money, destroying damaged or mutilated money, moving paper money, storing it and securing it etc. The problem of money getting stolen and even the possibility of printing fake money, pose significant challenges. Most of these problems would be eliminated if, a partial or whole shift was made to an official cryptocurrency.
With all that has been said in the previous paragraph, it seems wise to push CBDC to the fore – the intention being to partially or wholly, replace the use of paper currency at some point of time. The fact is that, the planning process to let CBDC dominate the money transactions of a nation is already in progress. This is true of many nations, a few nations like China are already into the testing phase.
So we come back to the main point, can a nation refuse to accept the CBDC of another nation. Fair to say that the answer is in the negative, once again the exception would be for nations that are very unstable economically and politically.
Let us keep in mind that, while everything that we have mentioned in this report is very likely to happen, nothing is going to happen overnight. Many issues related to the mode of transferring and trading CBDC on an international level, are yet to be clarified. Much of this process would need to be formulated and implemented multilaterally. Remember that we would have the Digital Dollar, Digital Yen, Digital Euro, Digital Mark, Digital Yuan and many more official cryptos. At a very basic level, these CBDCs would need to have that the ability, to be convertible to each other.
And for all those crypto enthusiasts who are eager to know, the effect that CBDC would have on overall crypto trade, here is our opinion. From all the information that is available, it does appear that the state crypto and private crypto sector will both function – neither can or will dominate the other. The IMF (International Monetary Fund) even thought that, the CBDC could be a joint effort of the respective government and the private crypto sector. Some analysts do point out that, China could deliberately reduce the influence of its private crypto industry. While this is no secret, the fact is that China has been apprehensive about private cryptocurrencies, even before it moved ahead with its official Digital Yuan plans.
Talking about the arrival of CBDCs and general interest in cryptocurrency, Glitzkoin Russian advisor Mikhail Kozlov comments, ‘… general interest in cryptocurrency has already been on the rise. The arrival of officially launched cryptocurrencies, will further trigger a rise in the number of crypto traders. In my opinion, conservative players would focus on CBDCs and the more adventurous risk takers would make a modest foray into the private crypto sector. It is way too early to predict much more …’.
GLITZKOIN: A quick recap of the Glitzkoin project and the GTN crypto token. The project was launched to improve the demand for natural diamonds and to enhance, the efficiency and productivity of the multibillion dollar industry.
The DiaEx diamond trading platform was developed using Stellar blockchain resources. The GTN token was launched as part of the project and is designated, as the mode of payment on DiaEx. Promoted by second generation diamond veteran Navneet Goenka, Glitzkoin assigned a multifaceted role to the GTN token.
The trading platform was completed in 2019 and was put through rigorous testing in early 2020. A team of diamond dealers subsequently did a pilot run on DiaEx with, actual transactions made on the platform. This process was largely successful and revealed a few areas for improvement. The Glitzkoin tech team was handling the minor adjustment when, the pandemic and subsequent lockdowns slowed down the process. The management will reschedule the full launch of DiaEx once the health crisis eases.
Talking about the multifaceted nature of the GTN token, the project is also focused on further increasing usage for the crypto – this aside from crypto exchange trade and the payment usage on the DiaEx platform. The concept is to have operators of various businesses, accept the GTN token as a mode of payment in their operations. Moving this idea forward Glitzkoin has confirmed a partnership with online ticketing giant Myticket.asia, wherein clients of the ticketing portal could use the GTN token as a mode of payment. Technical requirements for the integration of systems on both sides is at an advanced stage, nearing completion. Reviewing the challenges that the entertainment industry has been going through during the COVID pandemic, both managements have decided to set a launch schedule when the situation starts to normalize. The arrangement setup between Glitzkoin and Myticket.asia will form the blueprint, for similar deals to be negotiated with other business operators.
Related Resources: [Project Updates]