Almost half a century ago, the Bretton Woods agreements ended the “gold standard.” Next, the fiat monetary system came along. Now fiat is becoming obsolete with the advent of innovative digital blockchain technology.

Very soon, blockchain-based Central Bank Digital Currency (CBDC), with its own cash, cryptobanknotes, will replace fiat money.

Cryptobanknotes are the first generation of smart banknotes that are based on blockchain technology. They are produced only using banknote technology.

Each cryptobanknote has its own e-wallet. It interacts with it using two mandatory payment details of the blockchain. These are a public address and a private code printed on the cryptobanknote. Cryptobanknotes use special software to interact with the blockchain registry.

These notes are the only possible option for CBDC cash, which provides full-fledged CBDC circulation offline. Without the presence of the internet, without a smartphone, without banking equipment for accepting payments, and even without the presence of electricity.

Blockchain technology has burst into the financial world in the form of cryptocurrencies, stablecoins, and CBDCs. A huge number of central banks are developing or already testing CBDC payment systems.

True, at the moment, a truncated version of the CBDC payment system is being implemented. Although, it is only the digital part without the use of CBDC cash.

However, the full-fledged operation of the CBDC payment system is impossible without the use of digital and cash forms. Just as full-fledged circulation of fiat money is impossible without the joint use of both forms of fiat money.

A truncated version of CBDC cannot fully exist without strong support for the fiat monetary system. Moreover, alone, without this support, a truncated version of CBDC will be absolutely unviable and will depend on everything. It will depend on the availability of the internet and electricity, weather disasters, and the actions of hackers.

A truncated version of CBDC will be just an expensive toy for the central bank, slightly improving the current functionality of non-cash fiat money.

The central bank will receive a full-fledged CBDC payment system only when the CBDC payment system receives its own cash, fully backed not by fiat money but by the blockchain (own digital CBDC).

A full-fledged CBDC payment system will not need fiat money support. Moreover, using monetary systems of different generations by the central bank will slow down the country’s economic development.

Therefore, governments completely withdraw fiat money from circulation. At this moment, the next round of monetary evolution will come – the “blockchain standard.”

The cash CBDCs will provide not only many innovative CBDC functions but also full autonomy in work. Thanks to cryptobanknotes, the CBDC payment system will continue to work even when the central bank’s CBDC servers are completely shut down.

Moreover, the cryptobanknotes will help central banks migrate to the CBDC payment system by ensuring the following:

If a bank branch uses equipment for counting banknotes with a QR code recognition function, then at any time, bank employees will know not only the number of cryptobanknotes available at the checkout but also the addresses of their e-wallets.

Therefore, in the event of the theft of cryptobanknotes, banks can to reliably determine which cryptobanknotes were stolen. They can then make a corresponding mark on the e-wallet of each stolen cryptobanknote.

This is very important for bank branches collecting large amounts of money and ensuring the safety of money in ATMs. 

Who needs to break into an ATM if tomorrow all stolen cryptobanknotes will be canceled and every smartphone will offer to call the police as soon as it recognizes the QR code?

Thus, this allows cryptobanknotes to be used to facilitate the search for criminals and stolen valuables and as an innovative tool to prevent theft/robbery and other similar crimes.

In addition, this will discourage all criminal groups, mafia structures, and money launderers from using CBDC.

Cryptobanknotes are completely protected from being captured by the enemy and are the best money used in war or remote hostilities.

In terms of their physical properties, cryptobanknotes are similar to fiat banknotes:

This allows the use of cryptobanknotes by military units and service members of any military specialty, both in peacetime and in special wartime conditions.

CBDC cryptobanknotes do not require an internet connection or electricity. This is an essential feature for using CBDC in times of war.

Finally, CBDC cryptobanknotes have a fantastic military edge over fiat banknotes, gold, silver, or diamonds. The enemy will never be able to use the captured CBDC cryptobanknotes for their own needs.

To provide this function, the central bank will need banking equipment for counting banknotes with QR code recognition.

Thanks to this equipment, central bank employees will know not only the number of cryptobanknotes captured by the enemy during the hostilities at the box office of a defeated military unit or in a certain banking institution in the occupied territory but also the addresses of their e-wallets.

This will allow banks to reliably determine which cryptobanknotes were captured and block each captured cryptobanknote. The enemy will not be able to use a single cent of the seized money.

A small nuance. Cryptobanknotes CBDC, which are in the hands of the civilian population living in the occupied territory, will continue to circulate without any restrictions. This will instill in the population confidence in an early victory over the enemy.

Recently, Professor Franklin Noll and I finished polishing the theoretical justification for the existence of cash CBDCs.

Currently, central banks are not yet aware of this unique opportunity. It is key that the production of cryptobanknotes is envisaged at the early preparatory stages of the CBDC development.

The post Cryptobanknotes and Blockchain Standard — The Next Monetary Evolution appeared first on BeInCrypto.

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