Digital Currencies in Economies – Critical Analysis on the Future Role

Proceedings of The 5th International Conference on Research in Management and Economics

Year: 2021

DOI:

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Digital Currencies in Economies – Critical Analysis on the Future Role

Laila Ohk, Cam-Duc Au, Prof. Dr. Alexander Zureck

 

ABSTRACT: 

Current crises such as the global corona crisis (Sars-COV-19) can mean that citizens are increasingly looking for secure forms of investment to cope with crises as well as digital payment options to avoid contact with pathogens for payment transactions. One possibility for this can be digital currencies. The origin of digital money lies in the digital, decentralized Bitcoin, which was initially issued in 2008. In addition to Bitcoin, there are over 5,600 other cryptocurrencies as of June 2021. However, the term digital currency is not synonymous with the term crypto currency. In addition to cryptocurrencies, stablecoins belong to the group of digital currencies. The digital currencies of the central banks are called Central Bank Digital Currencies or CBDCs. The objective of the given paper is to address the current discussion about the possibility of digital currencies to substitute cash as well as fiat money. In doing so, quantitative analyses are used to assess the Bitcoin, Facebook’s Diem and the Swedish E-Krona in a critical manner. The paper states that digital currencies will be likely to play an important role in the future of finance. But the role Bitcoin, Diem and E-krona will play in the future depends on their advantages and disadvantages as well as the regulatory conditions and acceptance. The analysis shows that Bitcoin can be used for speculative investment purposes. The Diem and the CBDC E-krona, on the other hand, have the potential to become recognized means of payment in the future.

keywords: Blockchain, Digital Currencies, Central Bank Digital Currency, Distributed-Ledger-technology, Payment.