Legal assurance and consumer protection are two crucial concepts in the financial world. Unfortunately, for cryptocurrencies and digital assets, those concepts are relatively tricky to come by. While central bank digital currencies get a lot of attention lately, the Astra Protocol team is working on a solution for cryptocurrency users.
The Rise Of Central Bank Digital Currencies
Governments and central banks globally want to explore the concept of creating central bank digital currencies. As the name suggests, this is a digital form of money controlled and governed by central banks and country officials. However, there are many questions and uncertainties regarding the CBDC concept, as every nation appears to have a different approach. Currently, 81 countries – representing over 90% of GDP – aim to explore the idea of such a digital currency.
However, five of them have officially launched a project. China is the furthest into its experimentation, as the digital yuan has been put into the hands of many residents. Additionally, foreign visitors can use it during the upcoming Winter Olympics if they provide passport information. However, it is unclear if there will be a high interest in exploring this option by foreigners. Having one’s data on record with the People’s Bank of China is not an alluring concept.
Contrary to what some may expect, the US is not breaking much ground with its CBDC. The topic is actively discussed among officials, but it remains in the research phase for now. Furthermore, it is worth noting that two countries have already given up on creating central bank digital currencies. Until proper guidelines and frameworks come to fruition, the CBDC concept will create division among nations. That will not benefit the global monetary ecosystem whatsoever.
Cash Usage Is Declining
The focus on central bank digital currencies is not entirely surprising. Global cash usage has been on a downward slope for several decades. Although it is still a useful means of exchange, it is also cumbersome to carry around and use for both consumers and shops. Therefore, finding alternative solutions is crucial. As society becomes more digital-focused, a digital currency is the next logical step.
That shift in consumer behavior is part of the reason why cryptocurrencies are so successful. As a result, assets like Bitcoin and Ethereum have noted incredible price performance over the past few years. Not only are they speculative in nature, but Bitcoin is displacing gold as the go-to safe-haven asset. It was a matter of time until banks and governments decided to try their hand at similar efforts to retain control.
The one downside to cryptocurrencies – and decentralized finance – is how there is no legal assurance or consumer protection. Owning cryptocurrencies is financial freedom, but it also comes with plenty of responsibilities and risks. Astra Protocol aims to introduce a layer of assurance and protection that works on-chain. It is a very intriguing concept that can suit the needs of crypto users and central banks alike.
How Does ASTRA Work?
The purpose of ASTRA is to introduce a legal layer capable of plugging into any existing platform. Through ASTRA, funds will always arrive safely at the correct destination. Should there be a mishap, the team can resolve the issue quickly and return to the funds without friction. Adding a dispute clause – known as Proof of Trust – to the platform and smart contract can resolve any issues amicably.
The legal layer can resolve accidental and fraudulent transactions alike, protecting all parties in the equation. Furthermore, should one of the parties be dissatisfied with the transaction for any reason, they can invoke ASTRA to resolve the issue on-chain. It is a big step forward for the cryptocurrency industry and its sub-sectors, such as decentralized finance. Trust and protection are essential when dealing with finances in any environment.
As developers can plug the ASTRA solution into any existing project or platform, it is viable in traditional finance too. Central banks exploring digital currencies can benefit from the legal assurance and protection when building their CBDC infrastructure. New forms of money will always cause some confusion at first. Providing a streamlined and seamless experience where ASTRA can rectify wrongdoings increases the chance of success.