Digital Dollar Project: What Does This Mean And What Will Be The Fate Of Banks?.

Table Of Contents

What Is Digital Dollar Project?.

Digital Dollar Project simply means a project focused on ensuring that currencies are available exclusively in a digital form not in physical form. I.e the US Dollar in Digital form, Nigerian Naira in Digital form. The aim of this project is to ensure that fiat currencies assume a digital look and also to fast track trans-border trades.

Over the years many developed countries are beginning to realise the roles a digitised form of currency would play in the everyday transaction between governments and governments, individuals and individuals, businesses and businesses. While those who see the numerous advantages associated with a digital dollar project continue to clamour for its adoption by the world government I.e US government, some analysts seem to oppose the idea of a digital dollar project. The latter is of the view that a digital dollar project if adopted, will drastically reduce the important roles played by traditional banks thereby increasing the unemployment rate in the world.

What Are The Categories Of Digital Projects

Digital Dollar Project
Frankfurt, Hesse, Germany – April 17, 2018: Many coins of various cryptocurrencies

Unregulated or Decentralised Cryptocurrencies.

Like Bitcoin, Ethereum, Doge, Shiba, XRP, etc form part of our digital currency. These cryptos are created and operated by networks. Most of them have limited supply and the prices skyrocket whenever the demand is high.

The fact that these cryptos have value and people need them as they can use them to purchase goods and pay for services like the normal currency makes them a necessity for crypto lovers. They basically serve the purpose of a basic currency.

Digital dollar project
Image: Binance Credit

Stable Coins.

The second category we are dealing with here are stable coins. These coins are usually attached to a country’s currency. They have the same value as a country’s currency. Here we are attaching a cryptocurrency to a real currency or coin. I.e USDT which is attached to the United States dollar. 

Digital Dollar Project
Image: Ledgerinsights

Central Bank Digital Project.

The third category of digital currency is the Central Bank issued digital currency (government issued currency). Unlike the stable coins, unregulated or decentralised cryptos discussed above, the Central Bank Digital currency is issued by the government. It is minted and distributed by the apex bank of a country. In the US, the CBDC are the ones working towards this. In Nigeria, the e-Naira which was experimented with, by the Godwin Emefiele led CBN governor, is one.

Does The Availability Of Bitcoin, Ethereum Mean That Cash, Banks Are Going Away?.

The direct answer to this question is no. The Digital dollar has a different role to play in the economy from the fiat currency we use in many countries today. While digital currency serve online purposes and can easily be switched in transborder trades unlike the fiat currency which requires you to meet a Bureu De Change operator for conversion.

Who Will Build A Digital Dollar Project?

Digital dollar project requires a lot of things to be set up. This project can be embarked upon by the government alone or by the government in conjunction with private companies.

What Is Fiat Currency And Which Of The Categories Is Volatile?

Fiat currency simply means government-issued currency. In the United States, fiat currency is the dollar while in Nigeria, fiat currency is the Naira issued by the Central Bank of Nigeria.

Countries Leading The Adoption Of Digital Currency.

  • China
  • Saudi Arabia
  • Sweden

Countries like the United states of America, Canada are still behind in the adoptiodigitalgital currency. They are still doing research. 

Expert Opinions.

The opinion of experts like Austin from Texas, Rodriguez is that digital dollar would replace physical banks. Here is what he said in one of his interviews

AUSTIN, Texas – “If the U.S. moved forward with creating its own digital dollar, banks, as we know them, could be a thing of the past”.

Rodriguez said, “digital currency likely wouldn’t replace the physical dollar, but it would cut out the middle man, banks”.

Conclusion

In conclusion, the idea of the digital dollar would go a long way in mitigating a lot of wrongs because it is cheap, it is faster, and can easily be used in trans-border transactions. As Austin rightfully noted, it will reduce drastically the traditional roles played by traditional banks thereby cutting out the banks as people can now easily transact without having to queue up in banks. 

Although there are many advantages, some things need to be put into consideration like individual privacy, money laundering, phishing, etc. The US government needs to design a new project or adopt some good projects like the XRP as it’s official digital dollar.

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Author: aprokoarena

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