Today’s financial world is becoming increasingly digitized, and naturally, central banks want to adapt to the changing environment. The use of cash is rapidly declining. Globally, the rise of digital payment apps and COVID-19 have only accelerated the decline in cash usage, fueling interest in digital currencies and demand for easier payment solutions. As crypto adoption continues to expand, the idea of central bank digital currencies (CBDCs) has also gained momentum. Governments across the world have been flirting with, and examining, the idea of issuing their own CBDCs, with a handful already launching. It isn’t clear when CBDCs will become normalized. Don’t expect CBDCs to resemble Bitcoin’s (BTC) decentralized characteristics because, by definition, a central bank is a centralized entity. That being said, they can provide some of the same benefits, such as reducing payment verification times and providing proof of transaction. There are, however, still quite a few challenges to overcome. Related: Built to fall? As the CBDC sun rises, stablecoins may catch a shadow Among these challenges are the operational risks of the “cyber sphere.” While banks are accustomed to investing resources in safeguarding their “fiat” reserves, safeguarding digital currencies requires a different mindset. Blockchain technology has some inherent vulnerabilities — including anonymity and irreversibility — that can be exploited by clever scammers. Although, it’s not clear if CBDCs will leverage blockchain technology. Could CBDCs potentially expose central banks to new types of cyber threats? And how would these potential threats or vulnerabilities manifest themselves? Cybersecurity isn’t easy Hackers have become increasingly sophisticated and brazen in their attacks over the last few years. Both traditional finance and blockchain protocols find themselves victims of malicious intent. In fact, Denmark’s central bank was hacked as part of the SolarWinds operation in late 2020. This should sound alarm bells for governments everywhere.