The Difference Between a Stablecoin and a CBDC

Stablecoin and CBDC are two payment systems that are worth looking into if you are interested in digital payment gateways and cryptocurrencies 

What is Stablecoin?

First of all, Stablecoin. This is a crypto aimed at regulating certain normalities that other options don’t. Many see it as a genuine threat to traditional banking.

What is CBDC?

In recent times, CBDC has definitely began to emerge as a strong crypto option, and it is one that is regulated by various countries.

The Difference Between Stablecoin and CBDC

First, let’s focus on the main difference between Stablecoin and CBDC. This comes down to the mode in which the financial system works. Stablecoin for instance, is not regulated whereas CBDC is. This creates a significant difference between the two cryptos and highlights how Stablecoin is decentralised but CBDC aims to be centralised. There are definitely arguments to be hand on both sides regarding the regulation of crypto (just like the regulation of anything else!)

So to go on, Stablecoin has no regulating authority for its monetary value. The team behind Stablecoin has been working to keep it available to the general public and a key aim is to close the gap between flat currencies and digital ones. It has had impressive lines of growth considering it hasn’t been around that long. It is attempting to appeal to the masses in a way which BitCoin hasn’t managed too, not in a ‘everyday, general sens3, anyway., If it manages this feat remains to be seen, but it’s progressing well.

So, yes CBDC is a regulated monetary system, but one that is not available in all countries. This crypto is backed by reserves and/or fiat currencies from the country it is actively used in. An advantage of CBDC being centralised is that it has robust security in place for each transaction made, naturally offering reassurance to the user.

Stablecoin has a limit set for its market value, the limit can be set either via USD or with the price of gold. Stablecoin is constantly trying to achieve a stable asset value so that users can utilise it efficiently. The value of other cryptocurrencies is not stable, and, as the base suggests, Stablecoin wants to be. The team behind Stablecoin realise that cryptocurrencies lack features that flat currencies have and so is trying to bridge the gap between them both

CBDC stands for Central Bank Digital Currency and as mentioned it is a centralised system, one that is governed by a country’s finance authorities. Each nation will have its official currency and it is represented in digital form as CBDC. How this crypto currently stands is mostly to combat other cryptocurrencies. It is controlled by a country’s central bank and a country can keep a strong backup for it in the form of a reserve asset. CBDC’s value is usually worked out by that of gold.

Just like flat money, CBDC can be used to make any sort of payment, with each CBDC unit having a serial number linked to it.

Lastly, there is the tax setup. Stablecon doesn’t have any taxation aspects however CBDC is connected to the taxation policies within each country it is used.




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