The following excerpts (2) are used with permission from the publisher.
(crypto excerpt 1)
Friend or Foe: Crypto Central Bank Digital Currencies (CBDCs)
When considering the entities best equipped to roll out a brand-new alternative currency, the question of resources comes to mind. Deeper pockets, broader influence, and a wealth of experience in the management of currency circulation certainly can’t hurt. Perhaps this is why there is a growing consensus that the phenomenon of central bank digital currencies (CBDC) will play a role in future currency revolutions.
As implied, CBDCs are issued by a nation state’s central bank as an alternative to that nation-state’s fiat currency. They are similar to stablecoins in that their value is pegged to that of fiat currencies. But unlike stablecoins, CBDCs are not administered by decentralized ledgers, but are digital currencies issued and regulated by a country’s central bank or monetary authority.
From a monetary governance perspective, a digital currency offers both convenience and control. Its less cumbersome transfer protocols provide convenience for businesses and individuals looking for lower-cost options for transferring money domestically and especially abroad. Meanwhile, the centralized administration of the currency allows monetary authorities to control growth and inflation, making CBDCs less volatile than crypto.
At the time of this writing, according to atlanticcouncil.org’s CBDC tracker, 11 CBDCs have been launched, mostly in smaller nations, including several in the Caribbean. Fifteen nations have launched pilot programs, and many development and research initiatives are underway around the globe. The Bahamas’ Sand Dollar—a digital alternative to the Bahaman dollar (B$)—is among the most prominent of CBDCs to come along to date.
(crypto excerpt 2)
The Role of Crypto in the Emergent Metaverse
According to some analysts, a multi-user 3D world, such as that found within a video game or an avatar-based chat venue can only be considered a metaverse if it has a full-fledged digital economy. All of the approximately 19 major metaverse projects in existence at the time of this writing run their own cryptocurrencies. It stands to reason that a given metaverse, as it generally provides a platform for economic activity, naturally wants to create its own currency for use within its confines. Creating a cryptocurrency is not difficult (see chapter 6), and if a metaverse economy is being created out of thin air, it seems wise to create a native digital token to provide liquidity and a means of exchange for all the digital goods and services that will change hands within the metaverse economy.
Whereas Internet commerce throughout Web 1.0 and Web 2.0 relied on the digital transactions of fiat currencies, in Web3—the decentralized Web—this won’t be so. Web3 is where the metaverse is poised to flourish. Its promise is a platform that maximizes the autonomy, monetary and otherwise, of participants, including metaverse developers and denizens.
To the extent that the metaverse continues to form around such blockchain-based platforms as Decentraland and the Sandbox, it will be crypto tokens, such as Decentraland’s MANA and Sandbox’s SAND, that fuel these emergent virtual economies.