After a very long trial and rumors, finally, we are on the verge of the digital yuan’s mass adoption. The central bank of China has announced that it’s ready to deliver digital yuan to certain regions in the country. This news was widely embraced by Chinese businessmen and businesswomen such as Jack Ma and others. And of course, the news alerted many Chinese rivals, such as the Japanese, Europeans, and Americans.
The EU has also voiced its position toward the possibility of having digital euro, and it looks like they might take down this route if the digital yuan becomes successful. Everybody can already foresee that the next 5-10 years, we will get into the global tech war among developed nations.
But here’s the more important question for the regulars like you and myself. What does this development mean for Bitcoin and the usual altcoins? Will they remain relevant when all these countries start to embrace the digital version of their fiat currencies?
Bitcoin As The Most Trusted Cryptocurrency
Bitcoin was created by Satoshi Nakamoto as the result of him not trusting fiat currencies and the central banks behind these fiat currencies. Satoshi quickly gained a lot of followers who believed in the same idea. After the concept of cryptocurrency and blockchain became much more mainstream, some people started to build an interesting idea around it.
Stablecoins. Yep, built directly on the blockchain but without price speculation problem. Stablecoins have 1-to-1 valuation to fiat currencies, with USD-based stablecoins take the center stage. And these stablecoins have helped so many crypto traders to be able to hedge against their crypto holdings without the need to exchange to fiat.
And then, governments start to look at stablecoins and think they are good idea, except they don’t even need to have pooled fiat currencies inside one same bank account. They can just create their own “stablecoin” without any asset backing it, and just tell everybody to trust them (like how they tell everybody to trust their fiat currencies).
The problem with this kind of mindset is that it completely misses the point of Bitcoin. Yes, Bitcoin has been maintained by blockchain technology, but its existence is not to just introduce blockchain technology. Its existence is a political protest to tell central banks that people should be able to control money, not just central bank policies that don’t even get voted in by the people.
And because of this reason, it’s easy to see that Bitcoin will remain the most trusted cryptocurrency (way above digital fiat currencies), due to its record being decentralized, secure, and everybody can participate in mining it.
People Will Be Forced To Use Digital Fiat, But Bitcoin Remains An Attractive Asset
At the end of the day, Bitcoin is considered attractive for two different reasons. One, for being an uncontrollable cryptocurrency with a decentralized mindset. And two, because people make good gains by trading it. This kind of ROI is not possible with digital fiat except if you come back to forex trading with huge leverage.
At the end of the day, people love cryptocurrencies for their volatility. Removing price volatility and call it cryptocurrency adoption wouldn’t actually benefit anybody, as the main point of Bitcoin is to give back that control to the people and not let central banks keep interfering with money supply policy.
At the end of the day, digital fiat currencies like digital yuan and digital euro will be just legitimized version of Tether. People would be forced to use it, but they won’t believe it as much as they trust Bitcoin’s wild nature. And as long as Bitcoin trading remains legal in many parts of the world, there is always a demand for it.
So for those who have been wondering what role will Bitcoin play in our world post-digital currencies, I say Bitcoin would remain relevant, even though it might not be massively adopted as much as we hope it would be.