RIO DE JANEIRO, BRAZIL – Central bank digital currencies (CBDCs) are digital tokens, similar to cryptocurrency, issued by a central bank. They are pegged to the value of that country’s fiat currency.
However, CBDCs should in no way be confused with cryptocurrencies such as Bitcoin. While cryptocurrencies are created decentrally and are not ‘issued’ by anyone, they guarantee freedom for the people as governments and central banks cannot control them.
CBDCs are also digital currencies but issued by a central bank and that is precisely why they are de facto the opposite of cryptocurrencies. They are an instrument of freedom restriction and can be misused by malicious governments as a totalitarian means of control (see video below).
Many countries are developing CBDCs, and some have even implemented them (e.g., China). Because so many countries are researching ways to transition to digital currencies, it’s essential to understand what they are and what they mean to society.
Also Brazil confirms it will launch a pilot test of the Digital Real this year. With this development, Brazil will become the first South American country to launch a pilot of a sovereign digital currency.