What are cbdc's and how could they be a game changer for introducing technological innovations to events?
CBDC's could provide a gateway for adoption of new technologies for the event industry.
18th November 2020
So what are CBDC's? A CBDC, or Central Bank Digital Currency is a digital form of currency that is issued and regulated by the central bank of that country. It acts in the same way a cash, with its digital counterpart pegged to its fiat price.
As we have been pushed forward quicker into changing our payment behaviours, the reliance of physical cash has become less important. With online payment technologies already utilised by banks, transactions can be performed with a relative degree of efficiency within an outdated infrastructure. So that brings up the question to why we need to digitalise our cash? Certainly the liquidity of the market would increase due to the store of fiat being in a digitalised form, so there is less reliance of strategically placed cash reserves for large institutionalised transactions. But this is not the main importance why CBDC's could play an important role in introducing new advances in the event industry.
The importance of a CBDC that is pegged to fiat and government regulated, gives users confidence that there would be no other fluctuation in price unlike other digital asset classes. With this it can provide an on-boarding gateway into the blockchain environment; whereby a stablecoin such as a CBDC could be used to purchase cryptocurrencies easier, also minimising coin transfers (Fiat>Stablecoin>Crypto vs. CBDC>Crypto) to then interact with its respective blockchain protocol. This then opens up the opportunity to support blockchain technologies that can be used at events.
Although events that have been able to take place have adapted due to the unfortunate events of this year, into sometimes digitalised versions such as using virtual exhibition platforms or through video conferencing methods, these may become the norm. Blockchain techonologies could be the platform to monetise the virtual event space. Customer experiences in these environments can also be increased through the creation and selling of Non-Fungible Tokens (NFTs), allowing a person to take away/own an item from the event. This can be implemented well for a digital art exhibition or prizes at e-sport competitions for example. In order to get that far though, investment has to come from and be generated by a recognised currency that fiat provides and which a CBDC would be an extension of.
The race is on by governments to introduce CBDC's, as although many would deny trying to be the first to implement a CBDC, those who do will have the first opportunities to engage further in digital finance and blockchain innovations. A recent article from the Bank of England describes how some central banks have come together to discuss the underling principles to make these available to consumers:
A leader in this pursuit, China has been an advocate of CDBC's for a while and have fully engaged with implementing it into their financial systems. 2 Billion Yuan across 4 million separate transactions have already taken place during their CDBC trials, as described in this article by The Daily HODL:
There is not yet a confirmed date for when China will introduce their CBDC across the country, but reports like Cointelegraph's below suggest that they plan to use digital Yuan at the Beijing 2022 Winter Olympics Games:
Back in 2018 AMA+ were mentioning the possible use of cryptocurrencies at major events (available to read here) and how this could help both personal and institutional transactions, where these events interact with many nations and foreign currencies. A CBDC from the host nation should make the practicalities of implementing this straightforward.
A central bank backed digital currency may be a couple years away for most countries, but those who are embracing the changes in financial behaviour and the emergence of blockchain innovations will certainly be able to introduce new technologies and initiatives to their operations. A CBDC will be able to bridge the gap between traditional methods and future practices, whereby industries like the event industry can benefit from. In uncertain and changing times perhaps this was the catalyst needed to drive this change and speed up adoption of new creative opportunities and applications.
Have your say, do you think CBDC's are a good idea and what blockchain technologies have caught your attention for the event industry?