What is USDT – Can USDT become a CBDC of America and be used for payments around the world?
Cryptocurrencies have been long familiar to users all over the world because of their convenience and speed as well as their popularity on a global scale (although there are still many countries that are not yet familiar with these coins or accept them).
Among those coins, some stablecoins have been having a strong place in the hearts of coin players when they always have to change the coins they are trading or holding, converted into other coins above to make payments globally.
A typical example is Tether's USDT (stable coins with the largest number of users in the world). So, whether the above currency has a chance to become the US CBDC and can replace the US dollar for payments in the digital space around the world, let's find the answer with FinFan.
What is USDT?
*Tether (USDT) is a popular stablecoin that crypto enthusiasts have used for years to leverage their cryptocurrency trades. USDT is pegged to the U.S. dollar, and in theory, it should be unaffected by the market volatility that can so dramatically impact the valuation of other cryptocurrencies, such as Bitcoin.*
*Sourced by Finance Strategists
Can USDT become a CBDC of America?
What is CBDC?
CBDCs are digital currencies issued by central banks. Their value is linked to the issuing country’s official currency.
The history of CDBC?
On 20 October 2020, the Central Bank of the Bahamas introduced the "Sand Dollar" as a digital legal currency equivalent to the traditional Bahamian dollar.
In 2020, the Central Bank of Brazil announced plans for a digital currency by 2022, although these plans were pushed back by two or three years in 2021.
Since 2014, China's central bank has been working on a project called DCEP (Digital Currency Electronic Payment) or digital renminbi, often also referred to as the "digital yuan" as it would be backed by the yuan.
At the end of 2017, the China’s central bank organized a number of banks and institutions to jointly develop the DCEP system. In April 2020, DCEP began to be tested in four big Chinese cities: Shenzhen, Suzhou, Xiong'an and Chengdu.
One of the earliest examples of retail CBDC was in Ecuador from 2014 to 2018, when the central bank created a broadly accessible pilot retail CBDC that operated through citizens' mobile phones (it did not employ blockchain technology). The program closed in part due to low citizen adoption.
In the Eurozone, the Bank of Spain's former governor Miguel Angel Fernandez Ordoñez has called for the introduction of a digital euro, but the European Central Bank (ECB) has so far denied such a possibility.
A few examples of these early CBDCs of Wikipedia have shown us that many countries around the world are starting to take an interest in this model and develop it as a digital currency for cash and make the payment process happen faster, and more securely.
Can USDT become a CBDC of America?
There are 2 conditions for a coin to become the CBDC of a country:
- Recognized or possibly issued by a central bank. Here, the central bank of the US is the US Federal Reserve, an organization that is very averse to virtual currencies (especially stablecoins).
- CBDCs have a national unit of account, which is a central bank debt obligation and is backed by assets held by the central bank (VEPR, 2021). Because they are not very fond of cryptocurrencies, CBDCs are not foolish to let CBDCs become their debt obligations.
Both of these things, USDT is not satisfied, however, USDT satisfies the 3rd thing that makes them strong in convincing the Fed to recognize themselves as CBDC.
Compared to the number of users of the other two USD stablecoins USDC and BUSD, USDT is accepted by more users and has more trading opportunities on the market than the rest.
Can USDT be used for payments around the world?
With a very large number of users in the market not only in the US but also around the world, USDT can be a global payment solution. Currently, before exchanging crypto for fiat, traders or crypto market participants often choose USDT to exchange and conduct transactions instead of other coins.