A Central Bank Digital Currency (CBDC) is a digital form of money issued and regulated by a country's central bank. Unlike cryptocurrencies such as Bitcoin, CBDCs are legal tender and represent a direct claim on the central bank, ensuring stability and trust. CBDCs can be used for everyday transactions, just like cash or electronic money, but they exist purely in digital form. They aim to improve payment efficiency, reduce transaction costs, and enhance financial inclusion. Examples include the digital euro and China's digital yuan. CBDCs also offer central banks more control over monetary policy and can help combat illicit activities through traceable transactions.