Crypto FAQ: What is a Central Bank Digital Currency (CBDC)?
A Central Bank Digital Currency, or CBDC, is a form of digital currency that is issued by a central bank. The value of the CBDC is tethered to the country's fiat currency, so it is essentially the digital version of a country's fiat currency. CBDCs are centralized, unlike cryptocurrencies that run on a distributed ledger, meaning that they are issued by a Central Bank. However, because of this, the Central Bank would have the sole power to change the amount of money in any account at will; on the other hand, at least 51% of the users of a distributed ledger would need to be in agreement for this to occur with a decentralized currency.
Due to its centralization, however, CBDCs could be a more efficient and secure alternative to fiat currencies that can also more easily prevent illicit activity (due to the Central Bank's ability to keep track of the location of every unit of the CBDC, it would be more difficult to launder money or evade taxes, and it would be easier to detect criminal activity).
The following videos from CoinBureau and CNBC International goes into more detail on CBDCs:
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