Will The Launch of a Digital Dollar Lead to Monero Popularity?

More than 100 countries are considering researching, or testing their Central Bank Digital Currency, is the digital dollar in consideration?
Privacy coins such as Monero (XMR) interest is likely to raise after the mass adoption of CBDCs.

Mass adoption of Central Bank Digital Currencies (CBDCs) looks imminent. All around the world, numerous central banks are looking into the possibility of issuing a CBDC. The increasing interest in cryptocurrencies as well as a need to make financial settlements in a secure, fast, and transparent manner has led governments to consider offering digital forms of fiat.

In 2021, Elon Musk while praising cryptocurrencies noted that money is outdated and cryptocurrencies were an upgrade. One reason is that paper money has a critical environmental impact that the digital format solves.

Two of the largest economies in the world are interested in CBDCs but are at different stages. China is already pilot-testing its CBDC. The U.S. on the other hand is still debating and researching the efficacy of a CBDC. China sees its CBDC replacing the dollar as the preferred international settlement currency. With it, it will be able to challenge the dollar for world dominance, In fear of losing ground, the White House is the latest to push for the launch of the digital dollar.

With a number of other European countries and indeed the European Union looking to launch a CBDC, the mass adoption of CBDCs looks all but done.

What Do CBDCs Have to do with Monero?

One of the greatest criticisms of CBDCs is that they offer no privacy. With all transactions recorded in a central ledger, all transactions will be viewed and possibly tampered/manipulated by central banks. Other third-party stakeholders could also be involved which has some analysts raising eyebrows.

Related: IRAN CRYPTO-RIAL TEST BEGINS

However, these transactions are irreversible and no person or entity can tamper with the blockchain and or transaction. Unlike popular opinion, cryptocurrencies are easily traceable as all transactions are recorded on the respective blockchain. That is unless it is designed for this important feature. These types of coins are called privacy coins and the most popular of all is Monero (XMR). The users (sender and receiver) are anonymous by default.

Monero offers the highest level of privacy through various tools developed by the team behind the project. The project uses three key technologies – Stealth Addresses, Ring Signatures, and RingCT.

With CBDCs the new format of transactions and mainstream cryptocurrencies offering no privacy, Monero and other privacy coins could become popular among those who wish to keep their business anonymous.

Zcash also deserves a mention as a leading privacy coin.

It is important to note that privacy coins have come under heavy criticism, especially from regulators. The assumption is that these transactions are kept anonymous because they are illegal. In the future, we could see these kinds of projects come under heavy scrutiny from authorities.