Time For Silver-Backed Crypto?

The big advantage for merchants is the speed of transaction clearing. Credit card and bank payments typically take 24 hours or longer to settle. With crypto that will happen within seconds or minutes, allowing merchants to access their funds much sooner.

Just recently, Visa announced it would allow customers to use the USD Coin cryptocurrency to settle transactions on its network. USD Coin is a “stablecoin cryptocurrency” whose value is pegged to the U.S. dollar. This follows on the heels of Mastercard, BlackRock and BNY Mellon all confirming they would be facilitating crypto transactions for investments and payments.

Despite all this, some challenges remain.

Central Bank Digital Currencies

Many people can’t get past the idea that there’s nothing physical backing Bitcoin. And if you have no electricity you can’t get at your crypto.

The fact that nothing’s backing most cryptos is not that different from the currency we use today. It has value because central banks say so and people accept it. So that’s not the biggest hurdle. However, if there is a large and extended power outage, then there’s a real problem as crypto has to be accessed on a computer, tablet, or smartphone.

But these hurdles haven’t stopped numerous central banks from researching and implementing digital currencies. As the following chart shows, central banks around the world have been busy developing their own CBDCs (central bank digital currencies).

Over 60 central banks are currently working on this, so CBDCs are soon coming to a country near you.

These are not the same as cryptocurrencies. Central banks love the idea of eliminating cash. That’s because it allows them to track every dollar or other currency unit they create. That way they know who spends how much, when, where and on what.

The level of control that will ultimately give them will be unmatched. And the COVID-19 pandemic has massively accelerated this trend.

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