Unlike cryptocurrencies launched by private parties, a Central Bank Digital Currency (CBDC) is launched by a government through, the central bank of the nation. The crypto would be a stable coin, as the central bank would assure a fixed exchange rate between the CBDC and the fiat currency of the nation.
A few analysts now talk about the negative impact that, the CBDC could have on the private banking system. Without getting into the ‘yes’ and ‘no’ sides of the discussion, we strongly feel that the future of the CBDC should not be linked to the future of private banks.
Let’s not forget the time when conventional banks and even governments, banded together against cryptocurrency. While it is true that there are weaknesses in cryptocurrency just as there are weaknesses in conventional money, the solution lies in plugging the loopholes. Governments found it easier to ban cryptocurrency – the fact that there was a lack of understanding was something that no one cared to address. Conventional banks who acted as advisors on this issue to governments, feared that their existence would be threatened.
Against the backdrop of what we just mentioned in the above paragraph, it is no surprise that the CBDC concept could scare private banks. Let’s just say that ever since digital currency hit the scene, the comfort zone of the conventional banking system has been gradually narrowed down. Fully agree that digital currency itself has and continues to face, several challenges but, it continues to put up a brave fight.
Without completely discounting the fears of private banks, let’s look at a few options open to the private banking system. We are seeing private banks in an increasing number of nations, being granted permission to include crypto related services in their domain. Banks are being given permission to open accounts for crypto exchanges and traders.
Crypto custody services are gaining momentum, the conventional banking system could include such services in its operation. Simply put, crypto custodians provide safe storage for cryptocurrency. Some analysts see this as an activity that, could encourage corporate level investors to trade cryptocurrency. While we see pure crypto custody firms being launched, this is an activity that could be effectively conducted by the private banking system.
It is important to understand that, many nations are today convinced about the benefits of CBDC. While many countries have launched their digital currency in pilot test runs, others are not far away from doing that. We are fast reaching the point when, nations would adopt crypto currency mainly because other nations have done the same.
The sign is clear, private banks will need to adapt to the changing scene in the financial sector. By including various crypto related services in their operations, banks will not only manage to retain existing clients but also, attract a new clientele that is crypto savvy. Banks will continue to be at the center of functions like, granting loans etc. Loans that are granted would quite likely, be issued in the form of CBDC – so banks would need to hold that digital currency.
Mikhail Koslov, the Russian business advisor on the Glitzkoin team feels that, “the advent of CBDC will increase overall interest in crypto currency. Knowledge about cryptocurrency will be widely distributed and crypto laws, will do a lot to boost confidence. So we should see considerable increase in crypto trade, this in terms of dollar value and number of traders. Banks could be actively involved in the process provided that, they are willing to learn and adapt. Blockading cryptocurrency or more specifically CBDC would be an old fashioned thing to try’.
GLITZKOIN: Glitzkoin is developed on the Stellar blockchain. The project includes the multifaceted GTN token that currently trades actively on 3 crypto exchanges (Cointiger, Stellarport and Dobitrade). Glitzkoin makes a direct connect to the multibillion dollar diamond industry. The project is promoted by second generation diamond veteran Navneet Goenka, it aims to improve productivity and market scope for the glittering industry. A comprehensive diamond trading platform (DiaEx) is part of the project, it supports both B2B and B2C trade in diamonds. As mentioned above GTN is traded by crypto traders on three exchanges, it is also designated as the mode of payment on DiaEx.