Central bank digital currencies (CBDCs) are not a threat to cryptocurrencies; instead, they could enhance trust among skeptics by validating the underlying blockchain technology. This perspective was shared by Changpeng Zhao, the CEO of Binance, the world’s largest cryptocurrency exchange, during a press conference at the Web Summit in London.
Zhao stated, “Is it (CBDC) a threat to Binance or other cryptocurrencies? I don’t think so. I believe that the more we have, the better.” He noted that CBDCs would support the blockchain concept, reassuring those who are still wary of the technology by demonstrating that “our government is using the technology now,” as reported by Reuters.
Major central banks worldwide, along with the Bank for International Settlements—often referred to as the central bank of central banks—have been exploring the idea of creating their own digital currencies. In August, the European Central Bank even suggested that CBDCs could represent the ultimate solution for cross-border payments.
Zhao highlighted a fundamental distinction between cryptocurrencies and CBDCs regarding inflation and their connections to financial markets. He asserted that native cryptocurrencies are inherently deflationary assets. However, he acknowledged that both equities and cryptocurrencies have experienced significant market corrections due to rising interest rates, largely because the same investors tend to engage in both markets.