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Bitcoin crypto evolution: UK’s Britcoin and countries creating their own digital currency

Image credits: Ilyas Tayfun Salci/Shutterstock

Cryptocurrencies are in the thick of hundreds of controversies, if not thousands! These high-yielding financial assets had a difficult journey right from the start. 

The primary reason is the lack of central authority (decentralised payment network), and hence governments globally are afraid of it. Most governments fear the usage of Bitcoin for illegal activities like money laundering, terrorism, and illicit product purchase. 

As governments look to battle the decentralised component of cryptocurrencies, they are using the technology behind the currency, the blockchain, to spin off their digital currencies. 

To date, many countries have launched their cryptocurrencies, including:

  • Dubai: Emcash
  • Venezuela: Petro
  • Estonia: Estcoin
  • Russia: Crypytoruble
  • Sweden: E-Krona
  • Japan: J-Coin

What is Britcoin?

There are many other countries, developed and developing, the digital currencies. The latest one to join the trend is the UK. In the recent development, British authorities are exploring the possibility of creating a new digital currency touted as ‘Britcoin.’

The UK Chancellor Rishi Sunak previously formed a team of officials from the Bank of England and the treasury to look into the proposal. In the latest statement, Rishi Sunak said that the Central Bank Digital Currency (CBDC) would not replace cash; instead, it will coexist. 

“Any potential UK CBDC would exist as a complement to cash and bank deposits, and not a replacement. We know that cash remains vital for millions of people and are fully committed to ensuring people across the UK can continue to access it,” 

Rishi Saunak’s strategy to economic boost?

The rapid development of e-commerce has accelerated the shift towards digital payments. According to Sunak, digital currency is not intended to reduce cash usage, but to help during financial crises by allowing the Bank of England to give the economy a boost by paying Britcoin into customers’ accounts. 

Sunak adds, “We’ve already legislated to make it easier for businesses of all sizes to offer cashback without a purchase (in the Financial Services Act 2021). And earlier in July, we also launched a consultation, which seeks views on proposals for new laws to make sure people only need to travel a reasonable distance to pay in or take out cash.”

He further continues, “So by supporting innovation and technology, while also ensuring continued access to cash, we are making sure we have a sustainable and innovative payments landscape for decades to come.” 

Financial instability?

However, many have criticised the move as it could lead to greater financial instability and make it harder to regulate the economy. 

Further experts have said that it can lead to higher borrowing rates due to the CBDC eating into money available for high street banks to lend to borrowers. 

“We want to make sure the UK is at the cutting edge of innovation and technology in financial services, so it’s right that we explore the potential role of CBDCs to understand the wide-ranging opportunities and challenges they could bring,” says Sunak.

“The Government and the Bank of England have not yet made a decision on whether to introduce a CBDC in the UK and will engage widely with stakeholders on the benefits, risks, and practicalities of doing so,” the BoE said.