Digital currency has become incredibly popular over the past few years. However, many people are still unsure about this form of technology for payments. In the United States, the digitization of the US dollar is being heavily pushed. Many companies are learning about the benefits that cryptocurrency could offer them in the future. Today we will discover more about the digital dollar and how it could help your business to thrive over the upcoming years.
2022 – A Year of Great Change for Digital Currency
March 2022 saw a huge change when it comes to how we use our money in the United States. President Biden signed an executive order and added calls to action for a United States Central Bank Digital Currency (CBDC). The H.R. 7231, or “Electronic Currency and Secure Hardware Act” bill was introduced, allowing the US Treasury to implement a digital dollar. It’s important to keep in mind that this type of electronic money, which is called ECASH, is a little different to other forms of cryptocurrency, such as Bitcoin.
In February, Project Hamilton took place, with the Federal Reserve testing this form of digital currency. At one time, the project saw roughly 170,000 transactions per second. This shows how much effort and time the Federal Reserve Bank of Boston and the Massachusetts Institute of Technology Digital Currency Initiative put into this project. While this is certainly an exciting development for US residents, we are still a long way off it replacing our current type of money.
The Benefits and Drawbacks of Digital Currencies
Digital currencies are very much in their early days still. This is why so many people are skeptical about moving away from traditional money and transactions. However, the ability to conduct these quick transactions online could see businesses receiving far quicker payments. Especially when dealing with overseas customers. United States Representative Ayanna Pressley has also stated that it would help improve wealth inclusivity within low-income and minority communities. That is something that we would all like to see happen.
That being said, the lack of privacy that the CBDC could result in is a huge concern to both individuals and business owners. It’s concerning to think that while zero-knowledge proof technology is in place, privacy isn’t guaranteed unless settings are updated for each transaction. Another big concern is the lack of strong internet connections in some parts of the country and the world. This could impact the efficiency of transactions, which is something no business owner would want to contend with.
The good news is that ECASH research is still in its early days, which is why MIT Cryptoeconomics Lab founder and research scientist, Christian Catalin, believes a plastic card could be the way forward for this type of currency. This would limit data sharing and build trust in using this system.
Naturally, criminal activity and avoiding these issues is a hot topic within the cryptocurrency world. ECASH would lack ledgers, so the government would need to give every citizen using this type of money hardware with limits for how much it could hold. Of course, this is a huge project which wouldn’t happen overnight, and may delay the process for up to five years when it comes to launching the system.
Final Thoughts on the Digital Dollar
While it’s certainly an exciting prospect for individuals in the US, ECASH is certainly a while off becoming part of our everyday lives. What are your thoughts on this topic? Would you prefer to keep your regular US Dollars or have an entirely digital portfolio? It’s certainly something for every business to think about, and a topic we’ll be following closely over the upcoming years.
