The rise of Government-backed digital currencies, Govcoin Vs. Bitcoin.

Published 02 Aug 2021 by Abhishek Bourai

Table of Content

  1. Are GovCoins inspired by the rise of stable coins like USDT & USDC?
  2. Can GovCoins fill the gap between Stablecoins & Cryptocurrencies?
  3. Can Govcoins Become a Universal Mode of Payment? How to get GovCoins?
  4. What countries are first in line to introduce a GovCoin?
  5. Does GovCoins mean the end of Bitcoin? What you can do if you hold traditional coins.
  6. Conclusion

The idea of money is taking a major step forward with the introduction of GovCoin. Of course, governments will issue this new currency, but what happens when it competes against Bitcoin? Recent research has found that people are more likely to trust an individual than their government, so who do you think would come out on top: How is GovCoin different from regular cryptocurrencies like bitcoin?

Satoshi Nakamoto proposed Bitcoin in 2009 as open-source software. It operates without any central authority or banks, managing transactions and issuing new coins through a process called mining (anyone can also do this). Government authorities issue Govcoins, on the other hand, with all monetary policies decided upon centrally.

The age of carrying around cash is over. Shortly, traditional bank accounts will be a thing of the past as people use Govcoin via a central bank app to purchase goods and services directly from their smartphone devices in an inexpensive way. The idea has already clicked with more than 50 monetary authorities worldwide, including China, which currently leads this change using its E-Yuan, which is used by over 50,000 people globally while also surpassing Bitcoin’s daily volume on exchanges! Next up are Germany and France that want to launch virtual Euros within 10 years, followed closely behind by America preparing for E-Dollar trading too because it’s just easier & makes sense! Finally, Venezuela introduced a government-backed cryptocurrency named Petro to combat the inflation of the Venezuelan Bolivar.

Are GovCoins inspired by the rise of stable coins like USDT & USDC?

Stable coins have become a good choice to avoid the volatility of cryptocurrencies. You can find these coins on exchanges such as Cxihub, OKEx, Kraken, among others. You can also find Coinbase’s own stable coin called USDC now too! Stablecoins are becoming more popular in crypto-trading markets because they offer protection from economic instability by holding onto your money at all times instead of converting them to fiat or other cryptocurrencies. For more than a year, Tether has silently maintained a reputable third position In the cryptocurrency market after Bitcoin & Ethereum at a whopping $62 Billion market cap. In contrast, the USDC token stands at 8th position with a $25 Billion market cap ATW.

By seeing the tremendous success of stable coins, governments will not want to be left behind and let private companies like ether take over the $ in the digital space! However, even if GovCoins become real, it is hard to say if they will be used like USDT & USDC as a gateway currency for the cryptocurrency market.

Can GovCoins fill the gap between Stable coins & Cryptocurrencies?

Electronic money is in the future. Governments are developing a way to make it work for everyone, with stability and cheaper transactions. With banks collapsing left and right, governments have been developing new ways of making your cash trades more stable than ever before; Central banks will soon test electronic currency backed by government guarantees!

Bitcoin and Ethereum, by being very decentralized in nature, are at odds with the legacy financial tool of fiat. However, when prices for these currencies fall sharply due to high volatility, they become a stable asset that can protect investors from losses because their tokens have always been worth $1 - no matter how volatile the market is. Stablecoins also acts as an entry/exit point for digital currency investment and offer protection against crashes while providing access to quick transactions without conversion into dollars, INR, or other government-backed fiat currency.

Can Govcoins Become a Universal Mode of Payment? How to get GovCoins?

People who are currently unbanked need Govcoin to power the Agri-Digital economy, as it allows everyone international access to exchanges and transactions. GovCoins can also help spread adoption by bringing more people into the cryptocurrency world with lower transaction fees and central credibility; GovCoins are set to be used in over 50 countries! GovCoin will be a preferred mode of payment because they are accessible by anyone regardless of their location or formalities like background checks, unlike other types of currencies that require one to open an account with them first. In addition, Govcoins can allow for instant purchases within a few seconds, which is great for peer-to-peer trading! Think about how much time it takes to make your bank account verified just before you withdraw money from an ATM & a Bank teller.

What countries are first in line to introduce a GovCoin?

China, Russia, or the US, but almost 60 countries are exploring a way to digitalize their fiat currency in CBDCs(Central bank digital currency) Or GovCoins entirely created and controlled by the central governments. We can see a transition of paper money to GovCoins very soon in this decade itself. The future will be exciting when governments come up with their version of centralized cryptocurrencies for the public.

China: Digital Renminbi (RMB)

China is one of the most powerful nations in the world after the United States Of America. China has been exploring building a digital version of its currency since 2014. China is the first country to feel threatened by traditional cryptocurrencies like bitcoin and other decentralized coins & ban them outright to introduce a state-run stable coin that the Chinese government will stabilize.

In 2017, Chinese technology firms such as Alibaba (through its affiliate Ant Group), Tencent (which owns WeChat), Huawei, and JD.com were invited to cooperate with the central bank in developing and testing digital RMB — a way for people to make transactions without cash or credit cards. This is because China’s economic growth rate has slowed down since 2008 due to reduced exports,[8] which means fewer jobs are being created than before. To put more money into civilians’ pockets while reducing fees on currency exchanges across borders, this new idea was proposed by some of these companies during meetings held between them at Beijing’s Internet Finance Conference last year.

Till April 2021, there are around 100,000 users of Digital RMB. The digital RMB has been the most popular operational Government-run cryptocurrency yet.

Russia: A digital Ruble

Russia has taken a very positive stance on cryptocurrencies after relaxing the laws on digital currencies in 2019. The bank of Russia released a paper on CBDCs check it out here. CBDCs are yet another form of central digital currencies controlled and issued by the central government. Russia is one of the early movers after china launched its Digital RMB.

Russia has launched a pilot project of the digital ruble in June 2021, which is its version of central bank digital currency. The country’s thinking differs from other countries because Russia doesn’t have such concerns about too-big-to-fail banks like they do in America and Europe. It does not make sense to issue 100 percent electronic money when most payments are made with cash or cheques anyway!

The Russian Central Bank Governor Elvira Nabiullina highlighted some noteworthy points during her speech at BIS, for example, that while there may be benefits to issuing Central bank digital currencies (CBDC)s like reducing transactions costs and providing greater financial stability than traditional systems could provide China still wants more research on these technologies before considering any transition into an entirely digitized economy.

United States: The Digital Dollar

James Cunha, the banker who leads a research team at Federal Reserve Bank of Boston and Massachusetts Institute of Technology United States, is set to unveil his project on July 1st. The two institutions have been developing prototypes for digital dollars since 2016 that they plan to release this year to evaluate how it works with fiat currency and mobile apps like Venmo.

Researchers from these institutes are hoping their prototype will be an addition or supplement rather than compete against other technologies such as Bitcoin, enabling people worldwide without banks to access financial services securely by using crypto-currency transactions stored anonymously in public distributed ledgers called blockchains.

The Senate Banking Committee held a hearing on the future of America’s national currency - The US Dollar. As pressures mount to create digital dollars, China recently began testing its own digital yuan (DCEP), which will be included in popular apps like WeChat and AliPay. This is particularly concerning amid the widespread adoption of bitcoin or other cryptocurrencies for use as an alternative form of money abroad- as well as within international trade.

Check out the digital dollar white paper here

European Union: A digital Euro

The digital euro will become the Central Bank Digital Currencies (CBDC) of the Eurozone. It should operate like cryptocurrencies or virtual currencies, but with some unique caveats. Essentially, this is a new form of currency that can be used by both businesses and private citizens to make payments in all 19 countries within Europe’s monetary union. The European Central Bank (ECB) guarantees legal value for these transactions as well, so it provides an alternative payment method when people are on the go; once they’re back home from their travels across borders where traditional banking institutions might not have branches. Present nearby!

The European Central Bank (ECB) President, Christine Lagarde, has said that it will take between two to five years before the digital euro is implemented. During this period of time, many discussions need to happen about privacy issues and what role the ECB should have in overseeing everything related to a potential future non-physical Euro trading currency.

India: eRupi

The Reserve Bank of India has recently announced that it will soon begin working towards the “phased implementation” of its own digital currency. In a speech delivered on July 22, RBI Deputy Governor T. Rabi Sankar delved deep into the reasons for introducing this new platform and addressed any potential systemic risks associated with such an undertaking; he noted in particular that several countries have been busy crafting their own Central Bank Digital Currencies (CBDC) lately - including The United States, China, & Europe.”

In October 2020, Bahrain launched what is widely considered to be the world’s first Central Bank Digital Currencies (CBDC) as part of efforts by Gulf Cooperation Council nations to create a common financial framework and monetary union within 10 years time frame.

On 2nd August 2021 4:30 PM Prime minister Narendra Modi will announce the e-Rupi to the public. This seems to be a very early decision for the indian govt as many countries are still analysing the use case of CBDC for their people. Checkout launch announcement here

Does GovCoins mean the end of Bitcoin? What you can do if you hold traditional coins.

The introduction of govcoins can change the negative perception of cryptocurrencies from the common people who are too much into the centralized system. On the other hand, the people in love with the central systems that our world has today will have no problem adopting govcoins in their daily lives. Some people don’t believe in any crypto shit or online payments. They use hard CASH. Sorry to say, if govcoins & CBDCs are a hit govts will want to reduce the usage of cash & fully embrace govcoins, then we can see a rapid increase in popularity of bitcoin & monero. The core aspect of crypto has been zero control on the issuance of currency & control of the currency to the people.

I think both kinds of currencies, Traditional cryptocurrencies & govcoins, will co-exist for now, and at some point, the people will decide which has to be the ultimate one!

Conclusion

The future of money is still unclear. However, we know for sure that the world will need a currency to function in an era where cash fades from view and digital payments are ubiquitous. GovCoin may just be poised at the perfect time to fill this gap between stable coins like USDT& USDC and cryptocurrencies like bitcoin. So if you’re interested in learning more about GovCoin or our crypto exchange cxihub, subscribe to our blog & sign up! We’ll keep you updated on all things related to cryptocurrency as it develops over the coming years so you can stay ahead of your competition - no matter what happens with Bitcoin Vs. GovCoin.

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