Central Bank Digital Currencies (CBDC) are a massive buzz word in the world of cryptocurrencies today. But what is a CBDC, and how can they offer humanity innate benefits outside of existing structures? According to Investopedia, “Central bank digital currencies are digital tokens, similar to cryptocurrency, issued by a central bank. They are pegged to the value of that country’s fiat currency.”
In all honesty a CBDC is not a very novel idea for my simple mind to grasp, the production and management of said idea is where the CryptoVerse gets excited. Most everyone reading this article has a bank card or credit card, and for the “Tech Savvy” folks you may even have Apple Pay or Google Pay on your device. If the previous examples are not literal digital versions of a nation’s currency, then I don’t know what is. If I swipe my card at Starbucks (thanks Mance and Leemon) I leave them a digital promise that I have or will have (credit) the available fiat to acquire the goods in question. At the end of a business day or finite term the business in question will deduct the required amount from your account to cover the items purchased.
Now we get into the part that interests me, it may take 3 to 5 business days before the previously mentioned company comes to collect their funds. At that point I may have made multiple purchases at other venues also looking to collect. If for some reason I don’t have the available fiat to cover the cost, we begin to entertain overdraft fees and the like. This brings to light the glaring concern over traditional finance structures and payment systems.
Emtech and Hedera can use CBDC’s to alleviate this concern, on Hedera, transactions reach finality in 3 to 5 seconds not 3 to 5 days like typical legacy systems. With Hedera being one of the fastest digital assets to finality out there, they are also one of the greenest (carbon negative even). Let’s not forget about security, I have had to cancel my card multiple times after having someone somehow use it to purchase goods in another state. Companies like Visa and MasterCard have to (choose to) pass these losses on to costumers through often absurd interest rates or annual fees.
Why did Cadet the founder and CEO of Emtech and former IBM employee choose Hedera? Emtech was founded in 2019 by Cadet’s passion to build the infrastructure needed to close financial exclusionary practices for underrepresented populations across the globe. Cadet’s goal is to guide the path for ALL people to acquire wealth or at the very least have an opportunity to. Cadet’s mention of Hedera’s key features of performance, enterprise adoption and efficiency make Hedera an easy choice for those looking to invest (Not Financial Advice).
“We’ve taken a really strong partnership with a digital ledger technology company called Hedera Hashgraph, with whom we have partnered to build a highly performant enterprise and energy-efficient CBDC platform,” said Cadet.
Lastly, and most important (to me) is the track that Emtech and Hedera are on and the progress that has been made to date. Emtech began 2021 with one central bank under their influence and guidance. Emtech has recently signed up five regulators to practice in pilots through their regulatory sandbox as part of their FinTech offering. To start off 2022, Emtech has officially launched their digital regulatory platform and the future is looking bright for both Emtech and Hedera. With regulations looming and CBDC talk turning into practice, we should see Emtech and Hedera thrive under the right circumstances. Hbar should no doubt follow suit!