As Central Banks Go Digital, Crypto Competition Looms

Michael J. Casey is the chairman of CoinDesk's advisory board and a senior advisor for blockchain research at MIT's Digital Currency Initiative.

Although limited to Thailand, it would add in the monetary piece that's been missing from other distributed ledger initiatives to streamline securities settlement, such as that at the U.S. settlement and clearing agency, the DTCC. However, it's not hard to imagine that if Thailand's or another country's "Wholesale" central-bank digital currency experiment shows signs of success there will be pressure to expand these so-called CBDC models to a wider community of users.

The act of digitizing currencies - whether by central banks or by crypto developers - is likely to lead to increased global competition across currencies, as access and the cost of trading them becomes more efficient.

That will put central banks themselves under pressure to develop currencies that people want to use.

The competition won't only be among different countries' currencies.

A world of competing digital currencies isn't necessarily a utopia.

Imagine the same thing happening with fiat digital currencies promoted as investments by dictatorships.

We might just be getting a test of that with Venezuela's move to peg the bolivar to its new digital currency, the Petro.

Digital fiat currency could also become an alarming surveillance tool.

CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups.