# From Bitcoin to Central Bank Digital Currencies: Making Sense of the Digital Money Revolution
## 1 Introduction
Although the second version of Libra (a single-currency stablecoin arrangement) also poses several monetary, banking, and user risks, [19] defends that its issuance should be allowed in the Euro Area, provided that the regulatory framework of the European Union is duly reinforced and the ECB grants Facebook access to its balance sheet to establish a 100% Central Bank Digital Currency (CBDC)-backed reserve. This would imply \"(...) the configuration of Facebook as a Narrow Bank\" [19] (p. 11) and would foster the adoption of the digital euro by the ECB. Also according to The Guardian Newspaper (23 June 2019 edition) [18], the Bank for International Settlements (BIS) stated that \"(...) while there were potential benefits to be made, the adoption of digital currencies outside the current financial system could reduce competition and create data privacy issues\". However, in January 2020, officials from several central banks and from BIS met to discuss the potential for a central bank digital currency [20]. The above-described forces led countries and monetary authorities to start experimenting with the idea of introducing a new form of digital money--the CBDCs. The broad aim is to leverage the advantages afforded by digital technologies while retaining sovereign control over the stock of money used daily by citizens. This paper intends to give a broad picture of some core economic and technical aspects of CBDCs. The task at hand is quite demanding due to the novelty and interdisciplinarity of the topic and the prolific and dispersed (mainly \"grey\") literature. Consequently, perspective comes at the expense of detail, and hence some issues are only briefly addressed, and further discussion is needed. Our main claim is that the implementation of CBDCs will shortly spread worldwide, and, although there is no consensus on the model to be adopted, one thing is certain: there is a particular need for careful planning. The success of CBDCs depends on the degree to which they meet the expectations of potential users and minimize the inherent impacts of negative economic dynamics. Our exposition is formulated upon four main questions:  
1. How does the inception of Bitcoin and other cryptocurrencies contribute to the conceptualization of CBCDs? 2. What are the common patterns underlying the central banks' experiments, proofs-of-concept, and pilots? 3. What are the main benefits and risks of introducing CBDCs? 4. What issues related to CBCD are still at an early stage of formulation? For instance, how can smart contracts be used to create programmable money? What are the impacts of these features in terms of money usage and monetary policy? What can be done to improve interoperability between CBDCs, without conditioning the monetary policy tools, especially in small economies? What can be done in terms of offline payments? How does replacing a crucial part of the monetary infrastructure affect cybersecurity?We have performed a snowballing review [21] of English language literature on this topic, encompassing both academic and grey sources (e.g., reports from central banks and regulators). Through extensive forward and backward searches, we have identified more than 100 relevant references that we use to support our work. We organized the remainder of this paper as follows. In Section 2, we explain the main technological innovations introduced by Bitcoin, the cryptocurrency's underlying philosophy, and its economic implications. We then introduce a taxonomy of CBDCs and provide a comparison between Bitcoin and traditional central bank money. Moving on to Section 3, we present various central banks' experiments, proofs-of-concept, and pilots. Section 4 discusses the benefits and risks of introducing CBDCs, just before discussing the next steps in this journey, in Section 5. We close the paper with some conclusions.