Bitcoin (BTC) would benefit from global central banks issuing their own cryptocurrencies, the founder at the world's largest digital asset manager believes.
Barry Silbert, founder and CEO of digital currency asset manager Grayscale Investments and blockchain venture capital firm Digital Currency Group (DCG), has again expressed his bullish stance on Bitcoin in the latest Grayscale investor call on Feb. 12.
During the call titled “The State of Digital Currencies,” Silbert spoke of a number of important digital asset-related issues including Bitcoin’s role in generational shift in wealth, stablecoins, decentralized finance and central bank digital currencies (CBDC).
What are central bank digital currencies aka CBDCs?
CBDCs are virtual currencies that are issued and controlled by a federal regulator. In contrast to cryptocurrencies like Bitcoin, CBDCs apparently represent fiat money in the digital form. While no global jurisdiction has launched a CBDC to date, a number of governments have been increasingly exploring and building such projects, with China reportedly preparing to issue the first real-world test of its CBDC soon.
According to a new survey by the Bank of International Settlements, at least 10% of central banks are likely to issue a CBDC for the general public in the short term.
CBDCs could eventually provide more power to non-central bank cryptos like Bitcoin
Silbert, who claims to have bought his first Bitcoin back in 2012, or about three years after the creation of the very first block on the Bitcoin blockchain, argued that central banks that develop their own fiat currency-pegged digital currencies might be providing more power to Bitcoin by paving the way for institutional interest. According to the Grayscale CEO, Bitcoin and other non-central bank cryptocurrencies could eventually benefit from the same infrastructure that is used by the widespread adoption of CBDC:
“So at one point of the future we might have 80 different CBDCs. And if that happens, it would trigger a tremendous amount of investment in operators of financial systems where essentially every financial institution would then have to be able to safely store and transact CBDCs and, guess what, if they actually build that infrastructure, that same infrastructure could be used for non-central bank digital currencies like Bitcoin.”
Additionally, Silbert expressed confidence that central banks will likely eventually require users to use and engage with the existing financial systems and will not be capping the supply of the digital currency. “Central banks love to print money,” Silbert noted in order to point out Bitcoin’s limited supply feature. Predicting that CBDCs are “not a 2020 thing” but would rather be adopted in many years or decades, Silbert outlined that CBDCs are important because they contribute to the future value proposition of digital money.
Founded in 2013, Grayscale Investments is recognized as the world’s largest digital currency asset manager by major crypto exchange and wallet service Coinbase. In January 2020, Grayscale reported that 2019 had become a record-breaking year for the company in terms of accumulated investment. As reported by Cointelegraph, the firm’s total investment surpassed the $1 billion threshold in 2019, while assets under management (AUM) surpassed $2 billion.
According to the latest investor call, Grayscale has $3.1 billion AUM to date. The news comes amid Bitcoin breaking $10,000 threshold for the second time in 2020 to trade at over $10,200 at press time.