As central banks inch toward developing digital versions of their currencies, experts are finding innovative use cases for the offerings on the consumer side of things.
In a CoinGeek Backstage interview at the Bitcoin Masterclass #7 in London, nChain researcher Luigi Lunardon highlighted several utilities for central bank digital currencies (CBDCs) outside digital money for both enterprises and governments.
Lunardon disclosed in his interview that CBDCs might be tweaked to be deployed as digital tokens, a functionality that could speed up their adoption in the face of growing competition. The tokenization functionality, Lunardon remarks, may be leveraged by enterprises to prove the authenticity of real-world goods.
He added that while CBDCs may be used to show that goods are not stolen or fake, consumers may need help adopting them outside of payments. Lunardon suggested that one way around the debacle is to find applications for CBDCs as digital collectibles to generate consumer interest.
He points to creating personalized digital goods for consumers, noting that nChain will increase its research efforts in the proposed utility.
Another area to capture greater consumer interest for Lunardon is in micropayments. He stated that CBDCs could steal a page from Bitcoin’s playbook for small, divisible payments using Satoshi’s, noting that the real-world applications with CBDCs are broad.
Using the functionality of “granular” payments, consumers can now pay to rent a car for each mile rather than a lump payment. Users of streaming platforms will be given the functionality to pay for movies by the second or minutes based on their level of interest rather than a one-time full payment.
In a separate interview, nChain researcher Federico Barbacovi spoke about the prospects of building another layer on blockchains to improve the decentralization, transparency, and efficiency of systems.
“I think it is really interesting this concept of putting another layer on top of the blockchain, like differentiating between sovereign nodes from the governments and blockchain miners. I think this can empower governments to come into the ecosystem to develop new services that they can deploy for people and citizens.”
Exploring CBDC use cases
Global banking regulators are already mulling several CBDC use cases in their pilots, including applications in securities, tokenization, and cross-border payments. Others are experimenting with programmability functionalities to allow spending with specific merchants or locations.
Central banks are also looking at offline payments as a potential use case for CBDCs to cater to the payment needs of users without internet access. Central banks are picking up the pace in their exploration of CBDC utilities to compete favorably with already existing payment alternatives with a large chunk of the market share.
To learn more about central bank digital currencies and some of the design decisions that need to be considered when creating and launching it, read nChain’s CBDC playbook.
Watch: Finding ways to use CBDC outside of digital currencies
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