ould be used in public circulation, according to Coin Insider. But all eyes are on China, which has already distributed millions of digital yuan to hundreds of thousands of people in a series of pilot programs over the past year.  With more governments exploring CBDCs, it’s only a matter of time until they start to impact retail. We spoke with two digital currency experts to find out what you need to know about the future of this payment method.  Crypto vs digital currencies: What’s the difference? The first thing to know about digital currencies is that they’re similar but not the same as cryptocurrencies, according to Dr Christoph Breidbach, senior lecturer at The University of Queensland Business School.  “On a technical level, blockchain is an enabler of both. What this means is that a decentralised technology tracks and verifies transactions. The key difference, however, is the extent to which digital currencies and cryptocurrencies are controlled,” Breidbach told Inside Retail.  With cryptocurrencies like Bitcoin, there is no central authority that can manipulate or otherwise control transactions, whereas digital currencies, which are sometimes also referred to as ‘stablecoin’, are issued by a central authority.  “This can either be a government [CBDCs] or a private company,” Breidbach said. Notably, Facebook has been developing a stablecoin called Libra for the past few years. Rebranded as Diem last December, it has yet to launch. Another difference between digital and cryptocurrencies is that digital currencies are pegged to fiat currencies, which are government-issued currencies like the Yuan or US dollar. This means their supply is unlimited and they can be subject to the same monetary policies as any other fiat currency. In contrast, Bitcoin’s supply is limited, which means inflation is essentially impossible.  “You may want to think of Bitcoin as a type of ‘digital gold’ with a finite supply,” he said.  How customers will pay with digital currencies One of the most important things retailers will want to know about digital currencies is how they work at the point of sale. The answer is much like card payments, according to Byron Gold, country manager for Australia at Luno, an app that lets people manage cryptocurrencies.  “If you are using a card (such as Visa) to spend your digital currencies, there won’t be any visible difference to the consumer. CBDCs and stablecoins will look and act exactly like spending regular Australian dollars. The retailer will just decide whether they want the crypto version of the currency or the old version. However, there will be no physical version of cash,” he said. This is an improvement over cryptocurrencies, such as Bitcoin, where retailers need to adopt new technology to receive and sell them. How digital currencies will impact retail One part of the retail sector where digital currencies could have a significant impact is e-commerce, making it even easier for people to shop online. This is why Breidbach believes Facebook’s Diem presents a real threat to retailers. “Imagine Facebook is able to pull off its digital currency. All of the sudden, Facebook could become a ‘one-stop shop’ for everything – your news, entertainment and shopping needs. Personalised for the ‘market segment of one’. This is something traditional high-street retailers won’t be able to compete with,” he said.  “Any bricks-and-mortar retailer that aims to remain competitive would need to be able to focus on, and deliver, a unique customer experience on site. Once you add Covid into the mix, there are quite a lot of challenges that retailers need to address in the future.”