Could Central Bank Digital Currencies End Up on DEXes? Vitalik Opens Up Possibility Jonathan Ganor 2020-02-04 10:41:53 410 views

Could We See China's Digital Yuan "DCEP" on Etherdelta?

Central Bank digital currencies also known as CBDC's have been discussed since last summer's People's Bank of China's dual annual video conference. In that conference China revealed its plans to develop a digital version of the Yuan called the DCEP.

Many other governments have been followed China's lead and have announced their own CBDC. Tunisia's government managed to launch their own CBDC called the e-Dinar a few months ago. The Bank for International Settlements (BIS) the central bankerâs bank, published a report last year claiming 70% of banks are experimenting with the technology.

CBDC's on DEXes?

Earlier today, Ethereum's creator Vitalik Buterin tweeted some speculation regarding CBDCs. In his tweet he raised the hypothesis that CBDCs could end up on decentralized exchanges (DEXes).

If yes, then this opens the door to interesting possibilities regarding CBDC <--> cryptocurrency DEXes. â vitalik.eth (@VitalikButerin) February 4, 2020

It seems that Buterin's hypothesis is somewhat correct. If Governments decide to build their CBDC on existing and popular blockchains such as Ethereum, EOS or even TRON, we could hypothetically see them on DEXes.

Governments and regulators probably understand that possible risk to their control of their currency. As such, most CBDCs are likely to run on private consortium blockchain. This will give governments complete control of the currency along with fee-less transactions for users. Running a CBDC on a private consortium blockchain could also remove much of the transparency of blockchain, as it is not known if the public will have a block explorer.

So far, no government has announced a CBDC to run on a popular blockchain and only one has officially launched. While Buterin's question is an interesting one, it is unlikely to ever happen.

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