# From Bitcoin to Central Bank Digital Currencies: Making Sense of the Digital Money Revolution
## 1 Introduction
Nowadays, electronic money has an even broader definition that includes the activity of non-bank institutions, such as payment service providers. For instance, the European Central Bank [7] (p. 1) defines electronic money (e-money) as \"an electronic store of monetary value on a technical device that may be widely used for making payments to entities other than the e-money issuer. The device acts as a prepaid bearer instrument which does not necessarily involve bank accounts in transactions\". For a comprehensive historical overview of the evolution from primitive forms of money to digital, please refer to [8]. The history of money reveals an indisputable pattern: over the centuries, there has been a process of money dematerialization, with the nominal (facial) value of currencies increasingly detached from their intrinsic value. Accordingly, one may say that all money that exists in developed economies is fiat money. In the last 15 years, we have accelerated towards the ultimate dematerialized money economy--a sches economy. We can identify three technology-driven interacting forces that are disrupting the current global landscape. First, users claim for faster, easier, more efficient, secure, and universally accessible payment services, which only digitalization can provide [9]. This desire led to an intensified use of debit and credit cards, namely in e-commerce transactions, and catalyzed the use of new technologies to circulate money, such as electronic wallets and contactless payments [10]. In turn, this has fostered the entry of new non-bank players (e.g., PayPal, Apple Pay, Revolut) with a recognized brand and enough scale to gain an advantage over traditional banking institutions and sustain oligopolistic positions in the retail payment system [11]. FinTech startups and mobile network operators are now competing with banks as payment service providers and are gaining remarkable market share. Second, the digitalization of retail payment systems reinforces its role and creates a substitution effect on other forms of money, namely cash. The reduction in the demand for cash is visible in developed economies and has been particularly acute in some countries, like Sweden, where the amount of cash in circulation halved from 2007 to 2018 [12]. Third, the huge success of cryptocurrencies, and particularly Bitcoin, attracted extensive media coverage and the attention of individuals and, increasingly, institutional investors, sustaining the idea that there is an alternative to fiat money and creating the perception that Blockchain provides the ideal platform on which non-governmental currencies may be issued, managed, and traded. Since the publication of the paper that introduced Bitcoin [13], the cryptocurrency market has expanded at an impressive pace. On 5 May 2021 there were more than 9500 cryptocurrencies traded on more than 370 credible online exchanges, according to the CoinMarketCap site [14], reaching a daily trading volume of more than 213 billion USD. Also on 5 May 2021 cryptocurrencies had a market capitalization of more than 2.2 trillion USD, of which around 45% accounts for the Bitcoin segment, making it the largest unregulated market in the world [15]. However, as noticed by [16], while all cryptocurrencies can theoretically and practically serve as a medium of exchange, only Bitcoin has shown the potential to serve as a store of value, which has been feeding its use as a medium of exchange. With the announcement of Libra, by Facebook, in 2019 [17], concerns of global policy makers have escalated [18]. A currency that would be dominated by a company with a user base of around 2 billion raised several alarms, as reported in The Guardian newspaper (23 June 2019 edition) [18]: the co-chair of the Economic Security Project stated that: \"If even modestly successful, Libra would hand over much of the control of monetary policy from central banks to these private companies\".