Visa and PayPal Can Be the Cosmos and Polkadot of CBDCs
Existing payment players have a head start in the race to integrate central bank digital currencies worldwide, says our columnist.
Apr 9, 2021 at 11:16 a.m. EDT
Visa and PayPal Can Be the Cosmos and Polkadot of CBDCs
Just over a week ago, one action by payment giants Visa and PayPal moved cryptocurrencies out of a mere “speculative asset” zone into clear “currency” realm. While much has been said about this development, the future potential of these players is even more significant in the central bank digital currency (CBDC) world than with cryptocurrencies.
When Bitcoin was launched, no cryptocurrency project focused deeply on interoperability. Fast forward 12 years and a vast array of interoperability plays have developed – Cosmos, Polkadot, Chainlink and others. Similarly, CBDCs are at their nascent phase currently, with very few live projects and pilots. Fast forward a few years and interoperability is poised to become perhaps the most major bottleneck for CBDCs.
CBDCs face a challenge of interoperability
With the coronavirus pandemic pushing the use of contactless payments, central banks all over the world are rushing to experiment with CBDCs. The domestic capabilities required for CBDCs are already complex, but globally bridging the gap between various CBDC initiatives and existing financial infrastructure is a mammoth challenge.
Tanvi Ratna, a CoinDesk columnist, is the founder and CEO of Policy 4.0, a research and advisory body working on new policy approaches for digital assets.
CDBCs will need to share compatible technology, code languages, and standards, to achieve full functionality. Standardizing legislative structures, harmonizing regulatory discrepancies between jurisdictions, and ensuring CBDC’s legal tender status is another major dimension of interoperability challenge.
Existing payment players have a head start in the race to integrate central bank digital currencies worldwide, says our columnist.
Apr 9, 2021 at 11:16 a.m. EDT
Visa and PayPal Can Be the Cosmos and Polkadot of CBDCs
Just over a week ago, one action by payment giants Visa and PayPal moved cryptocurrencies out of a mere “speculative asset” zone into clear “currency” realm. While much has been said about this development, the future potential of these players is even more significant in the central bank digital currency (CBDC) world than with cryptocurrencies.
When Bitcoin was launched, no cryptocurrency project focused deeply on interoperability. Fast forward 12 years and a vast array of interoperability plays have developed – Cosmos, Polkadot, Chainlink and others. Similarly, CBDCs are at their nascent phase currently, with very few live projects and pilots. Fast forward a few years and interoperability is poised to become perhaps the most major bottleneck for CBDCs.
CBDCs face a challenge of interoperability
With the coronavirus pandemic pushing the use of contactless payments, central banks all over the world are rushing to experiment with CBDCs. The domestic capabilities required for CBDCs are already complex, but globally bridging the gap between various CBDC initiatives and existing financial infrastructure is a mammoth challenge.
Tanvi Ratna, a CoinDesk columnist, is the founder and CEO of Policy 4.0, a research and advisory body working on new policy approaches for digital assets.
CDBCs will need to share compatible technology, code languages, and standards, to achieve full functionality. Standardizing legislative structures, harmonizing regulatory discrepancies between jurisdictions, and ensuring CBDC’s legal tender status is another major dimension of interoperability challenge.