Research into the digital euro revealed a “generally accessible” CBDC design.
The digital euro would have Bitcoin-inherent properties such as privacy and pseudo-anonymity.
The European Union (EU) continues to make progress on the creation of its central bank digital currency (CBDC), the so-called digital euro. Having completed the research phase, the European Central Bank (ECB) is now aiming for implementation, eyeing a digital asset that shares many similarities with Bitcoin (BTC).
In one Press release The Governing Council announced on Wednesday that it had decided to end the first phase of the creation of the CBDC, which began in 2021. The design of a digital euro is now being considered. “which would be generally accessible to citizens and companies.”
As the ECB explains, The digital euro can be used for payments throughout the euro area. Additionally, it will be “free for basic use and available both online and offline.” The CBDC will also enable instant payment processing and can be used person-to-person, point of sale, e-commerce and government transactions.
Likewise, the European Central Bank points out that its digital euro, which will be mandatory for companies in this region, can be distributed via applications and the interface of payment service providers. Also via a digital euro application created and supported by the Eurosystem.
The ECB also points out that the digital euro It can be used by people without a bank account. This is done through cards provided by public organizations that have already implemented CBDC. In addition, users can exchange digital euros for physical money or vice versa at ATMs.
The European monetary institution also argues that its CBDC will offer users “the highest level of privacy.” According to the Eurosystem, issuers of the currency will not be able to access consumers’ personal data or link users’ payment information. Typical aspects of pseudo-anonymity.
Christine Lagarde, the president of the ECB, said she wanted to “prepare” her currency for the future. In his opinion, the digital euro is a form of cash that can be used “for all digital payments free of charge and in compliance with the highest data protection standards”.
The latter is in line with the recommendations of the Group of Euro Area Economic and Financial Ministers, which indicated this in January this year EU CBDC had to maintain privacy from users if I wanted to be successful.
What the ECB says about the digital euro also corresponds to the approaches of Miguel Ángel Fernández Ordóñez, the former governor of the Bank of Spain. While attending an event this month, he said that this CBDC “represents the transformation of the monetary system and the future of money and finance,” as CriptoNoticias reported.
Bitcoin already has everything the digital euro wants to have
According to the European Central Bank, other digital payment systems or instruments do not currently offer the characteristics that the digital euro will have. However, this notion is incorrect considering that the EU CBDC tends to bear similarity to Bitcoin, the pioneering cryptocurrency.
For almost 14 years, the decentralized protocol created by Satoshi Nakamoto has enabled precise national and cross-border payments, not limited to the EU. Besides thatis inexpensive, accessible and works both with and without an internet connection.
BTC can be distributed across wallets and is capable of providing instant settlement of funds via its second layer, the Lightning Network. It can also be used for peer-to-peer trading.and for paying at points of sale and on electronic websites. Additionally, Bitcoin can be used for government transactions, just as the digital euro envisions.
Bitcoin can also be used by the unbanked, as this is one of the target groups of this protocol. And if it wasn’t enough, Users can convert BTC into fiat currencies or other cryptocurrencies (and vice versa) via thousands of ATMs scattered across the planet.
However, the big difference between the European Union’s central bank digital currency and Bitcoin lies in data protection. Although the ECB promises a “high level” of protection for CBDC users’ private data, Not everyone believes it is possible.
This is because, like physical money, the European CBDC (and any other region or country) needs its central bank to function. And it is these monetary institutions that ultimately control the issuance of these assets and monitoring the operations carried out with themsince all relevant information is at the mercy of the issuers.
Bitcoin, on the other hand, is a decentralized asset that does not require any permissions or trusted third parties to function. In addition, it fulfills the goal of maintaining the privacy of its users. This is due to the numerous obfuscation tools that exist and the difficulty of determining the origin and purpose of a financial transaction based on first and last name.
The EU CBDC will come, but in a few years
In the press release, the European Central Bank said that the launch of the digital euro is planned for around 2025. considering that the preparatory phase will take several years.
According to the ECB, preparations for the issuance of the CBDC will begin on November 1st. This phase is about finalizing the regulation for the digital euro, as well as the selection of providers that will be able to develop a platform and infrastructure for this form of digital fiat money.
This phase also includes testing and experimentation with the digital euro to ensure that it “meets both the requirements of the Eurosystem and the needs of users, for example in terms of experience, privacy, financial inclusion and environmental footprint.”
In two years, the EU Government Council will decide again whether or not to move on to the next phase of CBDC development. At this moment, “The path is paved for the possible issuance and future use of the digital euro.”
However, the final issuance of the digital euro will only be approved by the Governing Council of the ECB. as soon as the EU legislative process around CBDC is completedclarifies the European Central Bank.