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Lately, many people have been talking about CBDCs and their potential development. As the world shifts more toward cashless payments and cryptocurrencies, CBDCs are especially getting more attention from governments around the world. This guide will cover more about what they are, how they work, where they’re available, their future, and how they compare to stablecoins.
In the world of finance, the term ”fiat” refers to a currency that’s backed by a government, instead of assets such as gold. It’s typically been used in the form of tangible coins or banknotes. With the rise of technology and digital transactions, some governments have developed ways to supplement fiat currency with a digital credit model. Transactions using this model are digitally recorded.
Although countries still use and accept standard currencies, the use of cash is decreasing in many places. More people are using credit cards, debit cards or e-wallets for transactions. CBDCs and their development gained more attention during the widespread shutdowns associated with the COVID-19 pandemic that began in 2020.