Binance CEO warns of CBDC pitfalls as digital currency pilots continue in the United States.

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According to Binance CEO Changpeng Zhao, CBDCs would never have the same level of independence as cryptocurrencies such as Bitcoin.

Cryptocurrencies such as Bitcoin (BTC) and Ether (ETH) will coexist “for a while” with more conservative digital currencies such as China’s digital yuan, according to Binance CEO Changpeng Zhao in a Bloomberg interview on Monday.

According to Zhao, central bank digital currencies will lack some of the core characteristics of cryptocurrencies such as Bitcoin (BTC), such as freedom of use and limited supply. “At the end of the day,” he said, “those are core properties that users care about.”

According to Zhao, the distinctions between the two types of digital assets can make central bank-issued currencies unappealing to those in the cryptocurrency industry. “Most central bank digital currencies will have a lot of control attached to them,” he observed.

Unlike fiat currencies such as the US dollar, the world’s largest blockchain, Bitcoin, has a finite supply, which means that there can only be more than 21 million Bitcoins throughout the world. Many cryptocurrency supporters have pointed out money printing-fueled inflation, implying that Bitcoin could emerge as a possible shield against fiat disaster.

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Zhao’s comments on CBDCs come as the United States continues to press forwards with its CBDC proposals, with the nonprofit Digital Dollar Project launching five pilot digital dollar projects on Monday. To carry out the checks over the next 12 months, the organisation partnered with accounting behemoth Accenture, a firm that has been working with Sweden’s central bank on establishing a CBDC since 2019.

Despite new digital dollar campaigns, Federal Reserve Chairman Jerome Powell stressed last week that getting a digital dollar right is “far more important” than being first. Powell has previously discussed significant CBDC-related issues, such as consumer privacy and protection.

 

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