A Central Bank Digital Currency (CBDC) is a digital form of central bank money that offers a secure and instant means of payment. Bitcoin, on the other hand, is a decentralized digital currency without a central bank.
Bitcoin operates on a decentralized network of computers, whereas a CBDC would be issued and regulated by a country’s central bank.
Bitcoin transactions can be relatively anonymous, while a CBDC would likely require identity verification, ensuring traceability of transactions.
Bitcoin has a capped supply at 21 million coins, which could prevent inflation. A CBDC, like traditional money, could have a flexible supply controlled by the central bank.
Both Bitcoin and CBDCs utilize cryptographic security. However, the security of a CBDC would be a major concern for the issuing central bank.
Bitcoin’s legal status varies by country and is often undefined or changing. In contrast, a CBDC would have legal tender status in its country of issuance.
Bitcoin is often seen as a “store of value” or “digital gold” due to its capped supply and price volatility. A CBDC would be designed for everyday transactions and as a stable store of value.
Both Bitcoin and CBDCs can be accessed and transacted digitally, potentially offering financial services to unbanked populations.