The Central Bank of Tanzania (BOT) is planning to introduce digital currency for seamless cloud-based transactions.
However, the Bank of Tanzania (BoT) says it is adopting a ‘phased, cautious and risk-based,’ approach in the proposed adoption of a Central Bank Digital Currency (CBDC)
The Bank of Tanzania intends to monitor research and collaborate with stakeholders for suitable use and proper technology on issuance of digital Tanzanian shillings.
It is thus not known when exactly the country or its people will start using digital currency.
Digital currencies happen to be the currencies that can only be accessible using computers or mobile phones.
This is because digital currencies only exist in electronic form. They do not have a physical equivalent.
Typical digital currencies do not require intermediaries and are often the cheapest method for trading currencies.
It is important to note that while all cryptocurrencies are digital currencies, NOT all digital currencies are cryptocurrencies.
One of the advantages of digital currencies is that they enable seamless transfer of value and can make transaction costs cheaper and accomplished much faster.
They also enable instant transactions that are easily executed across borders between any two points on earth.
For example, it is possible for a person living in the US, UK or anywhere overseas to make payments in digital currency to a counterparty residing in Tanzania or Kenya, as long as they are both connected to the same network.
But they also have some drawbacks, for instance digital currencies can be volatile to trade with and like all other digital-based platforms the currencies can be susceptible to hacks.
Central bank digital currencies (CBDCs) that Tanzania mulls to adopt are much safer in that they are regulated digital currencies.
These are normally issued by the central bank of any country, in this case BOT.
A CBDC can be a supplement or a replacement to traditional fiat currency.
But, unlike fiat currency, which exists in both physical and digital form, a CBDC exists purely in digital form.
England, Sweden, and Uruguay are a few of the nations that are considering plans to launch a digital version of their native fiat currencies