ECB’s e-euro has key differences with Bitcoin

One more digital currency will come to the market. The European Central Bank (ECB) has just announced it is actively looking into creating a digital version of the euro. Like other central banks in the world, ECB came to know the demand for electronic payments in the form of digital currencies. 

The idea of ECB’s digital currency has floated for years but it hasn't been looked into seriously. The idea got some momentum after pandemic coronavirus hits the world. ECB has keenly observed the sudden rise of private cryptocurrencies like Bitcoin, Dogecoin that replaced fiat currency during coronavirus.

The ECB has worried that the benefits of most digital payments goes to private companies and foreign currencies. The ECB said that the digital euro would be an electronic version of Euro notes and Euro coins and it would complement cash but not replace it. One can safely store new digital e-euros at ECB rather than at any commercial bank. ECB officials predict that their new digital Euro would roll out in 2026. There are two years period of time for designing and three more years for testing on new digital e-euro. 

How e-euro is different from popular Bitcoin

Other central banks are already exploring options in creating new digital currency. When Chinese central bank is doing research with a digital currency Renminbi (RMB), the Bank of England is looking into the possibility of developing it’s own “Britcoin”. The ECB is developing a digital euro which is almost like Bitcoin except in three issues.

·         ECB stressed that digital Euro will be greener than Bitcoin. It says digital euro project will it’s energy consumption which is negligible compared to Bitcoin. Energy consumption becomes an issue for Bitcoin mining that causes to damage to environment.

·         Fundamentally, Bitcoin is completely decentralized and anonymous. People can transfer money from one to another without disclosing the identity of the people who transfer the money because of a decentralized peer to peer network. This will not happen in the ECB's digital euro case which is relatively centralized and the ECB will have control on the new digital euro.

·         The ECB wants to know who gets the euro from whom in the network. ECB is not anonymous which is a key feature in the Bitcoin network.

Blockchain technology is behind Bitcoin. The Bitcoin protocol is built on a blockchain. ECB is not clear whether it uses the same blockchain technology or not. The ECB will continue to study which technology is best suited to develop its digital euro.