The digital euro

The year 2021 can be said to have been the year of cryptocurrencies, with many of them appearing new on the market and two of them (Bitcoin and Ethereum) growing in value and level of use by users around the world.

I do not know the future that awaits cryptocurrencies, but what is clear is that blockchain technology is here to stay and many states are considering offering to digitize their currencies. Among them Europe, USA, China, etc... and some smaller states have already put them into circulation.

From what the experts say, the digital euro would have various advantages for users, and the most important is that its value would be controlled by the ECB, thus eliminating the risk of speculation. A normal euro would have the same value as a digital euro.

And digital euros are easier to manipulate than currency euros. The blockchain technology that goes with them guarantees that all the transactions that are made can be controlled, and that those transactions are carried out immediately between people and/or institutions.

Image by Gerd Altmann from Pixabay 

Today we can make money transfers between individuals and/or institutions, but these transactions are made between the money that is deposited in the accounts of some banks. In the case of the digital euro, that money would no longer be in the banks but in the accounts of individuals.

And that is the big difference, because people could have their money distributed to their liking, part in a bank account and part in a private "digital deposit" that would not be in any bank, but would continue to be monitored and supported by the Central Bank to avoid any illicit activity.

Transactions between individuals of these digital euros would be instantaneous, and would be controlled by the corresponding Central Bank through blockchain technology. And this would be a great step in economic integration among all Europeans.

But not everything are advantages. An obvious drawback is that the euros that leave the bank accounts to go to the users' digital wallets, could not be used by the banks for their loan operations, and it will be necessary to regularize how people, companies and institutions can get financing.

Another important issue is our privacy. Today we can use our physical money without anyone (to a certain extent) knowing what we do. With the digital euro that ends, because EVERYTHING becomes controlled. And is this what we want?

And another issue is cybersecurity. I am not an expert in blockchain, but everything that moves on the “network” could be “hacked” in some way. It is a matter of time and technological capacity, and we know that the "bad guys" have greater capacities every day.

It is announced that the digital euro could be operational in the year 2025, and that is very shortly. Whatever it is, in the end it will be something gradual, but I am clear that for those of us who do not have a lot of money, the digital euro is not going to be a relevant problem.

A video can be seen at: https://www.youtube.com/watch?v=nQhl5LrLwyk