The Bank of England and the Treasury have moved forward with their plans to explore a UK Central Bank Digital Currency (CBDC) dubbed ‘Britcoin’, entering into a ‘development’ phase of planning. If a case is made, we could see a launch in the UK as soon as 2025. We want to understand the impact this will have on the food industry and online food ordering apps.
Digital currencies such as cryptocurrency have been around for a long time, however the significant rise in market value has caused it to be a hot-topic within the last year. It is therefore no surprise that governments and central banks are now looking to get involved, with 80% of central banks exploring Central Bank Digital Currencies at some level. It’s worth noting here that the key difference between Central Bank Digital Currency and cryptocurrency is that CBDC’s are controlled by a central bank, at par with banknotes whereas cryptocurrency is decentralised.
What Does This Mean For the Food Industry?
The food ordering landscape has completely shifted with digital orders for food growing at three times the rate of onsite ordering. Although online ordering isn’t necessarily new, it’s now becoming essential for businesses to get involved with as studies show restaurants that didn’t offer online ordering last year were expected to lose 70% of their customers. Of course Covid-19 exacerbated this shift but there’s no plans for it to slow down anytime soon. So much so that by 2025 online food delivery is expected to grow to a 21% share of the total restaurant market.
We are evidently living in a digital age and whilst online ordering platforms such as What The Fork are fundamental for businesses to grow within this digital realm, we must also look deeper into how these orders are paid for. More and more businesses are becoming cashless allowing more control over payments and time saved counting cash, therefore is the next natural step to use a digital currency? Firstly we need to understand the impacts a CBDC like ‘Britcoin’ could have on the food industry.
Transparency in the Supply Chain
When operating with digital currencies every transaction is traced, removing the need for paper-based records. This is particularly beneficial within supply chains as it allows for complete transparency on food quality and origin. Not only do businesses benefit from knowing exactly where their ingredients have come from but this information can be passed on to customers and in turn giving them confidence in what they are consuming. In today’s world this transparency equals trust for both suppliers and consumers.
Eliminating the Middleman
One of the stand out features of CBDC is that it enhances financial inclusion as much like cryptocurrency you don’t need a bank account to hold it. Payments become cheaper to make because there are no service charges from a third party (e.g. banks, Paypal etc), they are also made faster and more secure, eliminating the chances of fraud due to transactions being irreversible. This alongside more streamlined supply chains presents a real opportunity for businesses within the food industry to benefit from so called Britcoin.
So What’s the Downside?
Like any significant change, there’s always some concerns about the negative impacts it may have on an industry. Cryptocurrencies like Britcoin aren’t commonly used within the industry at the moment so there would be a huge learning phase whilst businesses got used to it. There’s also the issue of using tax money to develop and implement it in the UK, would this mean higher taxes for businesses in the short term to fund it? One of the key concerns is the control that the government would have over a UK CBDC, the real attraction to cryptocurrencies is the fact it is decentralised however if this is run by the UK government they will have greater insight into how people spend their money, potentially depriving users of their privacy.