The number of banks looking to introduce a blockchain-based national currency continues to grow. The Central Bank of Denmark is the latest one to announce their plans of embracing a virtual currency. As printing money becomes more costly and less efficient, this transition is not entirely surprising by any means.
Denmark Wants To Get Rid of Cash As Well
Similarly to some of the other countries looking to go cashless, the usage of paper money has declined in Denmark over the years. Recent statistics seem to indicate only one in five transactions in the country are completed with cash. Transitioning into a world of digital currency seems to make a lot of sense in this regard.
In fact, the Danish central bank has a plan in motion to use blockchain technology to achieve this goal. Using such a virtual currency would make crime harder and improve financial oversight. Similar remarks have been made by the UK, Sweden, and other countries who want to go cashless as well. Additionally, with lower transaction costs, this new currency can benefit everyone.
Unfortunately, there are some drawbacks to this concept to this idea as well. No one has successfully introduced a national virtual currency in the past, even though the technology to do is widely available. Moreover, this new virtual currency is designed to coexist with the paper version. However doing so could have severe consequences for the local economy.
Blockchain technology is the primary technology to consider for issuing a virtual currency. However, it remains unclear if the Danish central bank will create a proprietary DLT to do so, or use an existing solution to facilitate this project. It appears they are working on their own solution, though, but no official announcement has been made regarding this decision.
One could argue countries looking to go cashless should embrace bitcoin, but they will not be inclined to do so anytime soon. Bitcoin operates outside of the control of banks and governments, which is one of the reasons why they are afraid of embracing it. Additionally, Bitcoin is a volatile form of money, which makes it a less popular candidate in the minds of banks and governments.
That said, when countries issue their own national currency, necessary steps are being taken that may benefit Bitcoin adoption after all. We live in an era where digital solutions are becoming more prevalent, and consumers need to get accustomed with non-tangible currencies. Depending on how the E-krone plays out, consumers and retailers may still decide Bitcoin is a better option in a few years from now.
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