Binance’s enigmatic chief executive Changpeng Zhao (CZ) says that Central Bank digital currency is a threat to Bitcoin.
While giving his views about CBDC, the Binance boss CZ stated that the currency’s formation could threaten the advancement of Bitcoin. The exec responded to the question about how the digital yuan initiative of the People’s Bank of China is affecting the crypto world, raised during a video interview with Jeff Roberts, Fortune’s senior writer. The yuan digital currency development came as a response to Facebook’s Libra cryptocurrency launch.
Most CBDCs Are Restrictive in Nature
According to Zhao, awareness, and legitimacy regarding digital assets is enhanced due to the existence of various digital currencies or blockchains. Initially, several CBDCs will be restrictive in nature but over time will continue to undergo evolution, so countries should not be in haste to launching one.
Most CBDCs are most likely to be highly controlled and centralized since only a few of them enjoy the same freedom that bitcoin processes. As CZresponded to the threat against Bitcoin, he cautioned the following might occur over a long-term:
“If there is a government pushing another cryptocurrency that’s even more open, more free, has less restrictions than Bitcoin, and is faster and cheaper to use, then that would threaten Bitcoin. But that is good for the industry, it’s just something better than Bitcoin, and would replace it.”
He equated the bad experience to the one that would occur when the web language HTML5 replaces HTML4.
CZ: CBDCs Need to Be Closely Monitored while Bitcoin Is under Threat
CZ added that Binance has no intention for now to launch a yuan-based stablecoin stable that might complement the current stable coins that are operating on the exchange. He also said that capital flight from China faces too many restrictions, which impedes the fair operation of other stablecoins.
Germany’s central bank executive board member and also German politician Burkhard Balz yesterday said that the launch of a digital euro would undermine the current financial system. According to him, people need not use the central bank-backed digital as a store of value but instead use it as a payment mode.
Central Banks, therefore, need to build tools that limit the number of digital euros individuals can hold at any particular time to avoid a possible digital bank run.
Central Banks Need to Test and Launch Currencies Carefully
United States Federal Reserve chairman Jerome Powell earlier stated that the US doesn’t mind joining the CBDC party late, so it is not concerned with speed. Anthony Pompliano, the co-founder of Morgan Creek Digital, brought a counter-argument saying that the United States needs to launch a digital dollar fast; otherwise, it will lag behind China when it comes to accessibility.
Pomp gave those views on Monday during Lunch Money YouTube show discussion about cross-border payments where he stressed the importance of accuracy over speed in the issuance of a CBDC.
In September, Mastercard unveiled a virtual testing platform where central banks can measure and explore their own digital currencies. The payments giant has invited central banks, various commercial banks, advisory firms and tech companies to gauge CBDC tech designs, evaluate interoperability and validate use cases.