The controversy surrounding central bank digital currencies will subside

The co-founder of COTI believes the controversy surrounding central bank digital currencies will subside as major financial players adopt the technology

Co-founder of COTI (CRYPTO: COTI) Shahaf Bar-Geffen says the controversy surrounding central bank digital currencies (CBDCs) will subside as major financial players adopt the technology and optimal designs are established.

In an email interview with Bitcoin.com News, Bar-Geffen, a seasoned technology entrepreneur, responded to questions about the contrasting global approaches to CBDCs, with some nations like China and Canada actively exploring and implementing them, while others, including the United States government, expressed reservations.

The Trump administration went as far as issuing an executive order that effectively banned federal agencies from creating any CBDCs.

During a press conference in March, Treasury Secretary Janet Yellen said that the administration is working on a report for Congress on the risks and opportunities of CBDCs, an assignment given to her by an amendment to the 2023 omnibus bill.

“We’re working on a report for Congress on the risks and opportunities of a U.S. central bank digital currency, as mandated by legislation,” Yellen said at the time.

The co-founder of COTI, a blockchain technology company, also highlighted the crucial role of privacy in any CBDC implementation.

“We’re also working on an optimal design that considers privacy and data protection, which are paramount in today’s technological landscape. As part of a project last year with the Bank of Israel, the COTI team worked on exactly this solution, integrating COTI’s privacy solution to protect users. This is a must in any CBDC.”

The country’s central bank invited tech companies to participate in the third stage of its Digital Shekel Challenge in March 2022, presenting solutions for integrating the digital currency with various use cases and testing them in a simulated environment.

The Bank of Israel said in a statement that it had decided to invite COTI to continue working on a use case focused on cross-border payments. The company’s technology would be useful for enabling fast, efficient, and low-cost cross-border payments, especially in times of crisis when traditional systems may be shut down or limited.

“Many CBDC projects are still in the R&D phase, though, since traditional financial institutions, like banks, require time to implement changes of this magnitude. However, the ECB has signaled that its testing phase is coming to an end, declaring that it will launch its CBDC by the end of the year.”

Many governments and central banks often cite financial inclusion or payment efficiency as reasons for seeking to launch their respective CBDCs. Some experts, however, believe the actual goal of these CBDCs is to counter the rise of decentralized cryptocurrencies like Bitcoin (BTC).

In his written responses to questions from Bitcoin.com News, Bar-Geffen points to attributes such as a fixed supply of tokens in circulation and a high level of decentralization as distinguishing CBDCs from cryptocurrencies. Nevertheless, he concedes that CBDCs are likely to pose a challenge to stablecoins.

“CBDCs aren’t designed to compete with that [cryptocurrencies like BTC]. They may compete more successfully with stablecoins,” Bar-Geffen emphasized.

He downplayed the possibility that CBDCs will be built to interface with decentralized finance (DeFi) protocols or Web3 ecosystems, suggesting that stablecoins will likely continue serving as the bridge between fiat and crypto worlds.

The co-founder also rejects claims by some of the most vocal cryptocurrency proponents that governments adopting the technology are doing so to take control of the crypto industry.

Regarding the Africa Tokenization Council recently launched by COTI, Bar-Geffen said its goal is to accelerate blockchain adoption in Africa and the Middle East by uniting regional authorities with global blockchain experts. This strategic collaboration, he argues, seeks to streamline decision-making, secure funding, and rapidly implement blockchain solutions.

“We’re aiming to bring together government institutions, regulatory bodies, and leading blockchain experts from across the globe to create an ecosystem of innovation and cooperation. Our goal is to equip the African continent with the technological tools necessary to navigate the 21st century economy with ease and efficiency.”

The COTI co-founder says the initiative will focus on various use cases for blockchain technology in Africa, including cross-border payments, supply chain management, and identity management.

“Our vision is to empower individuals, businesses, and governments with the benefits of blockchain technology, ultimately contributing to economic growth and social good in the region.”

The co-founder explained that the council will be structured as a collaborative platform, bringing together key stakeholders to identify and prioritize critical needs and opportunities.

“This collective effort will be crucial in securing the necessary funding for projects and initiatives, ultimately enabling the rapid deployment of blockchain solutions throughout the African continent.”

The co-founder says the prospects of CBDCs being widely used in a few years depend on the background work currently underway.

“In five years, CBDCs will likely be widely used, at least in certain areas of the world, and the