The Bank of Korea (BoK) has created and tested a software that makes it easier for people to send money across borders by connecting different central bank digital currencies (CBDC) from other nations. The bank also experimented trading NFT using CBDCs.
Governor Chang Yong Rhee stated in a September address that the central bank had just finished a 10-month trial with a digital South Korean won.
Major economies such as the United States, the United Kingdom, and the European Union have been investigating the issuing of CBDCs. While China has already conducted multiple experiments. South Korea launched its CBDC experiment last year, and the first of two stages was finished in January.
“We have realized that there is no such thing as perfect technology or CBDC designs that can satisfy all the various goals and expectations at the same time,“
Chang Yong Rhee
According to the results of the trial, a CBDC can handle up to 2,000 transactions per second. However, it was discovered that distributed ledger technology; which supports crypto, lacks the scalability required for a retail CBDC. As a result, he suggests that the conventional centralized ledger database be used.
In July, Bank of Korea revealed that it was conducting “real world” CBDC testing with ten commercial banks.
What is NFT Trading?
Every NFT is completely reliant on demand and has no set value. This means that your gaming NFT may be regarded as either worthless or valuable depending on whether someone else wants to buy it.
The goal is to either acquire the most valuable NFT tokens or to purchase them cheaply with the intention of reselling them to others for a profit. As a result, it is clear that NFTs are just digital assets that may be traded much like cryptocurrencies, stocks, or commodities.
South Korean Government trials NFT Trading using CBDCs
In the meanwhile, the South Korean government has discovered a market for CBDCs and non-fungible tokens (NFT). In addition, the NFT market has grown remarkably since 2021.
NFTs have several applications, including GameFi, the metaverse, and the realm of conjecture. In comparison, any other physical good may be created as an NFT on a blockchain and sold between users.
A competitive advantage over other digital currencies will be offered by the combination of CBDC and NFT trading capabilities.
What is CBDC?
Central bank digital currencies are digital tokens issued by a central bank that are identical to cryptocurrencies. They are determined by the value of the country’s fiat currency.
A “fiat” currency is issued by the government, which is not backed by a real commodity such as gold or silver. It is regarded as a type of accepted legal tender for the exchange of goods and services. Banknotes and coins served as the traditional forms of fiat money. But technological advancements have made it possible for governments and financial institutions to replace the physical form of fiat money. Fiat money has a credit-based system in which balances and transactions are recorded digitally.