Do you know that the Central bank digital currencies (CBDC) are adopting Corda blockchain? What does CBDC mean, and what are its advantages? In this article, we will discuss the CBDCs and their benefits. We will discuss the terms CBDC and Corda blockchain in brief before moving ahead.
A Central Bank Digital Currency (CBDC) is a digital payment instrument, liability off and issue by the central bank or monetary authority.
These instruments carry the value. They denominated the CBDCs in the national currency unit of the central bank’s country or currency zone.
Digital financial systems can sync distributed ledger and digital asset management infrastructure like Corda by issuing CBDC.
These systems ensure transaction privacy, appropriate identity, governance control, and resilience to the CBDC.
CBDCs differ from the existing process of printing money. They are issuing digital tokens that are backed by fiat currency and act as a payment instrument for wholesale and retail banking.
CBDCs are also regulated, supplied, and controlled by the central bank. In this way, they differ from other cryptocurrencies and Stablecoin.
Corda blockchain platform is an open-source platform that can be used in a wide range of applications. This platform ensures the easy management of legal contracts and other shared data amongst the transacting parties. The applications of the R3 Corda inter-operate on a single network.
For more details, please refer to Why R3 Corda is gaining popularity - detailed analysis with features
There are two main types of CBDCs, namely Retail CBDC and Wholesale CBDC.
1. Retail CBDC: Retail CBDCs are issued to the public. There are many questions about their uses, implementation and potential design. The central bank’s motivation includes facilitating monetary policy, promoting financial ecosystem, fostering competition, enabling participation in a tokenized financial ecosystem modernizing payments, providing a cash alternative, etc.
2. Wholesale CDBCs: Wholesale CDBCs aim to establish a seamless digital payment ecosystem between banks.
With these instruments, banks can protect from build-up of credit risk on a real-time settlement process controlled by code.
To learn more about the advantages of CBDCs, click
This article is first published on www.blockchainshiksha.com
Written By Shubhada Pande