Mastercard program promotes CBDC innovation – Is the opportunity for the new currency to be accepted widely?

Mastercard program promotes CBDC innovation – Is the opportunity for the new currency to be accepted widely?

Yesterday, Mastercard summoned leading blockchain service and payment technology partners to join its new CBDC partner program. What was the agenda of the program, and did it facilitate widespread acceptance of this new monetary solution? Let's find out with FinFan.

Mastercard program promotes CBDC innovation.

Till now more than 23 CBDC’s projects have been successfully put into practice for 23 different countries around the world by Ripple, ConsenSys and Fluency.               

However, according to the Cointelegraph “Mastercard did not share specific plans for the group, but it mentioned many current buzzwords in the CBDC sphere — security, privacy, interoperability, private sector, driving innovation and efficiencies, for example.”

These are huge problems that many nations in the world have been skeptical about using CBDC for their countries' payments, because of the government’s controlling and ignoring the blockchain’s decentralization like other stablecoins or cryptocurrencies.

However, it is also because of the above properties that national governments appreciate and always support the appearance of these currencies. This comes from their inability to accept the emergence and dramatic growth of coins that are not under their control.

Therefore, Mastercard has done in the cryptocurrency market for years and decided to discontinue that segment and then focus on CBDC by participating in the Bank for International Settlements and the New York Federal Reserve Bank, as well as with individual central banks.

Is that the opportunity for the new currency to be accepted widely?

Strengths of CBDC

  • The CBDCs have the advantages of stablecoins when their value is assigned to the real currency value of certain countries.

When the value is pegged to the real currency of a certain country, the price of the currency will be kept stable and not subject to the strong impact of trading or manipulation by a certain shark or whale on the market like other cryptocurrencies.

That will help the exchange rate management as well as the economic policy of the countries not become disturbed.

  • Managed by a national or regional central bank.

The fact that these currencies are regulated by a national or regional central bank will help limit problems of corruption as well as money laundering. At the same time, it will limit the problems of investment in terrorism as well as the bad purposes of the network of some illegal elements.

Weaknesses of CBDCs

  • The CBDCs are centralized and will not be secured or can take privacy for users.

As noted above, CBDCs are created and placed under the control of national and regional governments. Therefore, it will not be decentralized but will be managed by a single node which is the central bank of that country or region.

Therefore, the Mastercard’s program takes place, and the parties are only concerned with issues related to the security and privacy of users.

Opportunities for CBDCs to be accepted widely.

Approved by 23 countries and regions proves that CBDC can be widely applied worldwide and has the potential to completely replace fiat.

However, some of the core weaknesses of CBDC can be solved by some methods related to blockchain technology such as using a distributed ledger so that hackers cannot correct user information as well as transferring private keys to each user. transactions and make them private blockchains so that information is not stolen.