The Banking Executive Magazine - July Issue 2021

purposes by individuals, busi- nesses, and financial institutions. HISTORICAL EVOLUTION AND REGULATION The concept of digital currency dates back to long decades. We hereby trace the evolution of various forms of digital currency: • Bitcoin: launched in 2009, is rec- ognized as the first privately is- sued, decentralized (ledger-based), and encrypted digital currency or cryptocurrency. Today, there are an estimated 7,000 distinct cryptocur- rencies. Since their introduction, cryptocurrencies have been char- acterized by extreme price volatil- ity. Cryptocurrency has primarily served as a speculative investment, with more limited use as a medium of exchange. • Stablecoins: Private sector digital tokens, backed by fiat government- issued currency held in physical reserves, were first introduced in 2014 and designed to address the extreme volatility of ledger-based cryptocurrency. However, like cryptocurrency, stablecoins are pri- vately issued and neither regulated nor backed by a monetary author- ity. Central Bank Digital Currency