Germany & Blockchain Adoption: Countering CBDCs

By Zacharias | RekTimes | 6 Jun 2022


6 June 2022: Presently, central bank digital currencies (CBDCs) are being either directly developed or at least in the process of research & development in over 100 countries - accounting for over 90% of the world's GDP. However, Germany has chosen to take a different approach. Citing shortcomings in the "dangerous" and undemocratic nature of CBDCs, Germany is embracing decentralization through blockchain technology instead.

The following is an overview of Germany's vision for digital currencies and why the country is choosing to adopt blockchain over a CBDC digital payment system:


Germany & Digital Currency

A considerable amount of research & development with respect to digital currencies has occurred all around the globe in the past five years. Germany inked its path in 2019 after an address from the Deutsche Bundesbank of the Republic of Germany. The 2019 address outlined that Germany would engage in a blockchain-friendly approach and fund organizations within the country to develop fintech applications.

In 2020, the German Parliament passed the Virtual Currency Regulation bill that opened the doors for commercial entities to utilize digital currencies like Bitcoin. This new ability of German-based banks allowed them to engage in business with cryptocurrencies on the blockchain and has help to cement Germany's stance on the digital currency world stage.

Not everyone in Europe is choosing to follow Germany's approach. The following countries are in the process of conducting their own digital currency research:

  • United Kingdom
  • Switzerland
  • France
  • Spain
  • Italy
  • Netherlands
  • Czech Republic
  • Austria
  • Hungary

The Digital Euro

Despite taking a different take on blockchain, Germany still resides within the European Union and must comply with EU policies on the matter. The European Union has placed forth a blockchain strategy which it is outlined how the 'gold standard for blockchain includes:

  • Environmental Sustainability
  • Data Protection
  • Digital Identity
  • Cybersecurity
  • Interoperability

The European Union is moving to digitalize the euro currency and turn it into a CBDC. The European Central Bank (ECB) would issue the digital notes and reportedly focus first on the development of peer-to-peer transaction (P2P) abilities. The currency is intended to become Europe's new digital cross-border payment system and revolutionize the financial heart of Europe.

The ECB recently announced that it plans to have a digital euro released within the next four years. It has been stated that the digital euro will not replace cash, a widely shared strategy around the world.


Germany's Democratic Approach to FinTech

Obviously being a part of the European Union, Germany shares a hand in the development and facilitation of a digital euro. However - this does not change Germany's approach to adopting and utilizing blockchain technology. The country is actively pressing for more utilization and is funding startups & web3-related development projects.

One such example is the push for German-based commercial banks to allow their customers to invest directly into Bitcoin or Ethereum. Savings banks are currently putting together a pilot program to launch an in-house cryptocurrency wallet to enable this. It would open up cryptocurrency adoption to an estimated 50 million Germans.

Germany has been steadily rising in its cryptocurrency adoption metrics, with the majority of investors being 34 years or younger. With a young core and sizable interest from external investors, many institutions are seeing the long term value in developing blockchain-based applications.


This has led to a many number of German blockchain startups that includes:

  • BlockAxs
  • Blockchain Helix AG
  • Centrifuge
  • CircularTree
  • Finery Tech
  • Gnosis
  • Coindex
  • Bitbond

The popular 1inch Exchange (1INCH) and Iota Foundation (MIOTA) are also based in Germany.

Bridging Blockchain & the Euro

The most difficult aspect of blockchain adoption for Germany is how it can utilize digital ledger technologies (DLTs) without compromising its ability to engage freely in trade and commerce with its other European neighbors. Reportedly, back in March 2021 it was announced by the Deutsche Bundesbank that Germany had in fact figured out a way for investors to buy & sell assets on the blockchain in exchange for central bank money (EURO).

With the successful implementation of this technology (combined with scalability), Germany is paving the way for the country to avoid the CBDC method and truly integrate democratic financial products into its economy. 


Closing Analysis

Germany's push to implement blockchain and facilitate the ability for commercial and personal parties to engage with cryptocurrencies speaks volumes to the underlying opportunity & legitimacy of the cryptoeconomic space. Millions of Germans will soon have the ability to invest directly into assets like Bitcoin & Ethereum, opening up an entirely new asset class to German citizens that can and should lead to greater financial opportunities.

Germany has chosen to take a different stance on the digital currency stage and has not been afraid to take the risks associated with novel technologies. The country should be praised by the cryptocurrency community to have a reputable, democratic nation endorsing the basic fundamental principles behind DLTs and blockchain projects.

As the cryptoeconomy becomes more mature over time, Germany will be a key model in other country's quests to become blockchain-based countries.

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