What is the significance of currency digitization? (Currency Digitization)

The significance of currency digitization is what? Digital currency is an important breakthrough in blockchain technology, and its application in the financial field mainly includes electronic cash and bank fiat currency. As a payment method, digital wallets allow users to directly purchase, trade, and store bitcoins, among other operations.

So, what does digital currency mean for the general public? What changes will it bring?

First, in the early stage of our country’s economic development, how can we ensure the security of our assets? How should individuals use this information? For example, if you want to use your phone or computer for daily consumption, you need to complete the payment operation through a bank card. At this time, you don’t need to create a hardware wallet specifically for payments! If you want to use smart contracts to achieve this function, you must have digital currency (DCEP) to operate normally. Therefore, most of the paper settlements in China currently belong to paper form, and due to the emergence of some small retail situations, many customers cannot accept cash transfers or credit card payments. Therefore, this method is generally not supported abroad because they do not use real fiat currency but a popular technology in our daily lives. (China Business News)

Second, in the economic field of our country, there are two important trends in currency digitization: higher credibility in currency issuance and helping to improve the utilization of funds. Another issue that needs attention in the process of currency circulation is the risk of anti-money laundering, which is a key area of research in various countries at present. From this point of view, although digital currency has received support at the national level, there is still a lot of space overlooked by people. First, it is based on existing laws, and there is no discussion about whether to adopt digital currency. However, in the future, with the continuous development of digital currency and the improvement of relevant legislative norms, currency issuance will become more legalized.

Third, based on the existing system, promote the exploration of digital currencies in a broader application direction. For example, the central bank digital currency is a plan proposed by representatives of the United States Congress. The goal of this plan is to promote the use of cross-border payment systems worldwide, and it may also involve the participation of other countries and international organizations, making digital currency mainstream and attracting public interest. (China Business News)

Currency Digitization

Over the past two hundred years, the digitization of currency has developed rapidly. Although we are now witnessing the development and application of digital economy, there are still many uncertainties.

To achieve this goal, some tools are needed to complement our payment system, means of value storage, and other infrastructure. These tools are a type of special asset that is pegged to fiat currency and has a fixed price, such as physical gold or real estate, but in an electronic form. Therefore, they can be used to manage existing global trade settlements.

However, it is unclear which encryption technologies the central banks will adopt to facilitate future transactions. It must first address scalability challenges, and its design should support solutions that enable the widespread use of blockchain networks.

Historically, digital tokens such as Bitcoin have gone through several important eras. On January 17, 2009, an article in The New York Times pointed out, “Over time, people are becoming more willing to accept cryptocurrencies as a form of payment.”

“I have serious doubts about this. If we want to make this world stronger, we cannot ignore it-even if it is a new type of encrypted currency created by central banks.” However, this may be a good sign. “A sovereign currency of a country will always maintain a part of its currency supply for other countries to use.” In the ten years since the birth of Bitcoin, Bitcoin has been in its infancy. According to data from Bitcoin Treasuries, the total supply of Bitcoin in the country was about 40 trillion US dollars at the end of 2017. (Cointelegraph)

However, due to the competition among governments around the world for the dominant position of the US dollar and their desire to make it popular using emerging technologies, especially after the collapse in recent quarters, the US Federal Court has delayed a resolution that requires the US Congress to pass legislation to regulate Bitcoin-related activities.

In addition, Jerome Powell, the chairman of the Federal Reserve, also expressed similar views last week. He said, “By May 2020, we will see more than 50 countries/regions launch their CBDC, including China. It is difficult to avoid such incidents unless more regulatory sandboxes appear.” Bitcoin is a new digital form and can be used for daily consumption instead of banning traditional business models. In early 2018, the Bank of England announced its stablecoin project, which was an example of a large loan fund flowing into the market. At the end of 2017, the European Central Bank issued a report detailing how to ensure that private companies are not restricted from using Bitcoin and other financial tools by banks. At that time, the CEO of the company, Christine Lagarde, told Reuters, “When you start investing in these new products, you can buy more and hold less.”

At the end of August last year, the French central bank issued a statement stating that it had completed the evaluation of its CBDC project.