REVIEW ON THE CENTRAL BANK DIGITAL CURRENCIES ON ALGORAND!

In this article, I am going to take a look and review the idea behind the Central Bank Digital Currencies, also known as CBDC and how it can be based on ALGORAND block-chain.

But before then, I shall briefly review the Algorand protocol, block-chain and digital currencies, as well as how they can be related.

Lastly, I shall also look at why the implementation of a Central Bank Digital Currency is worth const by nations and governments.

WHAT ALGORAND ECOSYSTEM IS?

Algorand is the world's 1st open-source, unadulterated proof-of-stake block-chain innovation, that facilitates the improvement of scalable, adaptable block-chain answers to issues. 

ALGORAND AND BLOCK-CHAIN SETBACK (TRILEMMA) 

Algorand is the first Block-chain that has unraveled the Block-chain trilema which infers that a block-chain can't be genuinely decentralized, secure and versatile (scalability) simultaneously, but could only be at most two of those three. The customary block-chain can't genuinely or ideally offer these 3 features at the same time. Rather, one would need to forgo some (or one) for the others.

THE CONCEPT OF CENTRAL BANK DIGITAL CURRENCY (CBDC)

To better understand the idea of CBDC, one needs to understand money and how it works in the economy:

UNDERSTANDING MONEY OR CURRENCY

Every country of the world has a currency. Money is an essential exchange tool that no society can do without. Without money (in whatever form), how do you trade easily? Well, talk of barter trade, we all know it's setbacks. It wasted a lot of time, energy and resources.

The point I'm trying to make is that the extent of essentiality of money in an economy is very much. Money serves as an exchange medium; measure and store of value; standard for deferred payment and as an account unit. All these functions are crucial to issues of trading, economy and well-being of the people.

STABILITY: THE MOST IMPORTANT QUALITY OF GOOD MONEY

The extent to which a currency's value is stable is known as stability. If the value of money in a given currency or nation keeps changing over a short period of time, it is said to be unstable. The value of money is it's purchasing power — the amount of commodities a it can buy at a given time.

If the value doesn't change (significantly), it is said to be stable. And of money or a currency is unstable, it will fail to act as a measure value or be difficult to be used as a payment standard. And, in fact, it won't stably store value.

DIGITAL CURRENCY AND IT'S ADVANTAGES

As I wrote earlier, money is expected to be as stable as possible. It has been discovered that by digitizing money, stability can be more easily achieved, along with many other benefits (of digital money). Digital currency is money in digitized or electronic form. It isn't physical. Digital money acts like physical money except that it can't be held, counted and spent physically or with the hand. 

Advantages of digitized money includes:

First, digital money aids fast transactions and do not require high transaction fees unlike when dealing with physical money.

Secondly, It is borderless and geographically unrestricted. I can send and receive digital money from anywhere to anywhere in the world, online.

Third, digital money is now in use to a great extent world-wide and so far, it has brought significant advancement to the financial market — a lot indeed! Banks and other financial media nwk operate with electronic money for some of their services.

Lastly, the idea of stability is more feasible with digital currencies by the use of stable-coins.

CENTRAL BANK DIGITAL CURRENCY (CBDC)

One of the 1st institutions to begin the globally talk on the prospects for using CBDC is the Bank of England. Sweden and Uruguay were the next in line to consider the idea and it's implementation.

A Central Bank Digital Currency or money (CBDC or CBDM) is also called Digital Fiat money. CBDC is just like the normal government fist money authorized by the government's law as the one, general currency for all its citizens.

CBDC WILL BE CENTRALIZED

Unlike in crypto-currency, CBDC would need centralization, that is, it won't be fully de-centralized as that is against the whole idea. Nonetheless, it would consist of some de-centralization. CB Digital Currency will function just like physical money for exchange, value store and account unit.

INTRODUCING ALGORAND BLOCK-CHAIN AND CBDC!

As earlier noted, Algorand's features makes it the most justifiably suitable to build on and achieve feasible applications or uses.

So, these countries are considering the huge benefits that CBDC built on block-chain will bring. However, since CBDC cannot be fully de-centralized, then, a hybrid of block-chain and the typical currency management system is being considered.

In the wake of the coronavirus pandemic, numerous countries are considering utilizing Digital resources as an answer for their liquidity and monetary difficulties. They trust that making a national CBDC will assist them with accomplishing this. 

WHY ALGORAND (FOR CBDC)?

ALGORAND is an improvement on the common block-chain technology. ALGORAND offers optimum level features and has a lot of applications. It is very applicable for establishing a STABLE DIGITAL CURRENCY management, that is secure, flexible and viable.

Moreso, it's transactions finality makes it the best, efficient medium for stable-coins to be built on it. 

CONCLUSION

Implementing Central Bank Digital Currency by nations would benefit them a lot. Building of CBDC on Algorand means that the CBDC will be a hybrid of centralization and de-centralization. With CBDC on Algorand, nations can be able to establish a central digital money that will operate like the central paper/coins currencies of this day, but with an assurance of great security.

Other advantages of having CBDC on Algorand include:

Technological proficiency; Prevention of unlawful acts; Protection of cash as an open utility; safety of payment channels; and more financial account holders because of affirmation of security of their money.

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