European cryptocurrency, is it a good idea?

By Roberto D. | CryptoFarm | 4 Jul 2020

The idea is to create a European currency (based on the euro) in order to speed up transactions. According to many, the digital euro "represents an innovation in the financial field capable of profoundly revolutionizing money and exchange" and the advantages may not be just these.

In fact, the Italian Banking Association underlines how there could be advantages "in particular in terms of efficiency of operating and management processes".

A European digital currency that follows the rules

The idea of a digital euro can be convenient not only to speed up transactions and operational processes, but also for other reasons.

A digital euro would follow existing rules and live under the supervision of the ECB, which would like to maintain so-called monetary stability.

In particular, a digital euro could compete with similar but private solutions, such as Facebook's Libra (although it is almost certainly defunct ..), but also with other cryptocurrencies such as Bitcoin.

In fact, the essence of Bitcoin is decentralization, or the opposite of a possible digital euro, which we imagine would move under the control of the European Central Bank.

European Central Bank digital currency: stablecoin or altcoin?

I imagine that a potential digital currency of the European Central Bank is a stablecoin with its value linked to the euro.

Precisely for this reason we speak of "digital euro". It would in fact be a digital asset whose value would be tied to that of the euro. The price trend of this new crypto-asset would be almost the same as that of the euro.

A stablecoin, as can be seen from the term, is more stable and therefore less volatile than a classic cryptocurrency such as Bitcoin, Ethereum or Ripple.

Digital euro: opportunity or risk for cryptocurrencies?

The birth of a potential European digital currency could be seen both as an opportunity, but also as a risk for cryptocurrencies.

The risk is in fact to offer citizens a crypto, but centralized solution. In fact, the mission and essence of the cryptocurrencies themselves would be missing.

There is no doubt that the most intransigent members of the crypto community would not welcome the entry into this central bank market, but in a certain sense we can find positive aspects.

The interest of central banks, large corporations or business banks such as JP Morgan, who founded his JPM Coin, a dollar-linked stablecoin, could be seen as a victory for the crypto world.

In this sense, traditional finance would change its approach by changing its nature and opening up to alternative solutions, just like crypto-assets.

I honestly believe that many ignore cryptocurrencies, and although I do not welcome the entry of the government into the crypto world, I can only be happy with it. Let me explain: when governments had to "hazard" a cryptocurrency similar to that described in this article, they could no longer ignore the existence of cryptocurrencies.

And what do you think of it? Let me know in the comments. Thanks for coming here and see you soon!

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