The European Central Bank (ECB) has finalized prototypes for a digital euro and is preparing to make a decision on whether to develop the European Union's fiat currency in digital form. The ECB has examined the use of distributed ledger technology and smart contracts for the potential new digital currency. The prototypes demonstrate the possibility of integrating digital euro design choices into the existing payment landscape while allowing for innovative features and technologies. For the prototypes back-end, the ECB opted for a centralized model based on unspent transaction outputs (UTXO), which are also used in cryptocurrency transactions. The UTXO system allows for fast and efficient transaction validation, supports various payment types, and safeguards privacy. It also enables conditional payments without the need for smart contracts, which are popular in decentralized finance.
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In June, the European Commission is expected to publish a bill that addresses privacy safeguards and other key issues regarding the digital euro.
The multiple advantages taken from the blockchain, specifically on speed and costs are well understood, yet, we remain a bit skeptical about privacy and user control. Traceability is much more controversial. The economic interest of the ability of following the transactions sector by sector is evident but most will fear its liberticidal side. Bitcoin has a bright future ahead of it.
Why wait for CBDCs if you can already transfer assets around the world using stablecoins on decentralized blockchain with an institutional cash management system ?
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Bitcoin as a treasury investment hedge
We were already discussing it earlier this year, Bitcoin had started to decouple with the stock markets. The correlation reached a peak last December. It must be said that Bitcoin was closely connected to the American stock exchanges and was especially considered a risky asset since the COVID crash. Indeed, like its peers, it had massively benefited from the abundance of liquidity injected by various central banks around the world. However, several factors have created an appetite for Bitcoin in 2023. The American banking crisis, in particular, has greatly served Bitcoin. Let's not forget that it is its original concept - Bitcoin was created as a safe-haven asset in response to the traditional banking system. We may now consider it has regained the role of a safe-haven asset.
The decoupling is interesting for you because Bitcoin can, once again, offer you an interesting hedge on your treasury investments if you are exposed to the stock markets
The Fipto Research Team
Sources : TheBlock, Coindesk