If you don’t know bitcoin in 2020, it proves that you are completely off the Internet From the uninterested to the ruined, the emergence of digital currency has changed the graphics card industry, online payment and Internet people’s thinking. “Decentralization” has become the hottest vocabulary in 2019, and everyone on the Internet has spoken about it mouth.
However, the core of digital currency is decentralization, and decentralization means that the role of the central bank will be completely eliminated, and it is perfectly replaced by the black box rules of digital currency. This is the only reason why digital currency cannot be used by various countries. Accepted, it is impossible to become the currency form of the new era.
The key point is that if the digital currency system is established by the bank, then the blockchain technology and decentralized technology of the digital currency itself may no longer exist. Then, is the digital currency without the core technology still the digital currency? We quote some content from other articles for your reference, some of them may have translation errors.
Digital currency and blockchain technology may cause irreparable losses to the banking industry. This statement has a long history. Greif, President of the Savings Bank of Russia, warned in 2016: “In the next 3–5 years, the banking industry may collapse.” Advocates of new technologies believe that if digital currency replaces the current currency, traditional contracts Will be replaced by electronic contracts, and credit will be carried out in a peer-to-peer manner. Therefore, the necessity of the state or bank acting as an intermediary will disappear.
But the collapse of Bitcoin and the failure of the first encrypted digital currency ICOs have shaken this confidence. People began to doubt the reliability of financial and legal systems without intermediaries. Dedicated virtual currency cannot guarantee that the system transaction is fast enough, because it takes more time to clear the digital currency than regular payment. As a result, more and more potential investors believe that private digital currencies will still be mainly niche products and cannot replace traditional financial systems.
The threat comes from the other side. In recent years, the attitude of some countries towards blockchain and digital currency has changed from exclusion to acceptance. Basically, every major country has started researching related technologies. In particular, some governments and central banks are eager to permanently deactivate tangible currency, because the latter needs to do a lot of work in printing, monitoring and anti-counterfeiting, and it will also produce a “shadow economy.”
In addition, the digital currency issued by the central bank can effectively prevent tax evasion and tax evasion, greatly increasing the difficulty of money laundering. The unified management of digital currency can achieve all these functions in the future, and this ability is not convincing.
Back to the Future
What major changes will digital currency bring? The current currency is issued through a two-level system, which is first provided by the central bank to private or national commercial banks with a certain interest rate to ensure liquidity. Commercial banks inject funds into the economy by issuing credits and become secondary issuers. They also absorb part of the funds of residents and various organizations in the form of deposits.
Once a unified digital currency is issued, the central bank will no longer be just an arbitrator and supervisor, but a real participant. This is not new in history. For example, the Bank of England, established in 1694, is one of the oldest central banks in the world, and its main purpose is to collect profits. Competing with other banks in the country, accepting deposits and providing loans to commercial institutions on equal terms is completely free.
The first and second banks in the United States and the predecessor of the Federal Reserve did so. In other countries, institutions similar to central banks also dominate the national credit system. For example, in 1900, Spanish banks controlled 68% of credit assets and 73% of savings.
This situation began to change in the 20th century. As private bank savings increased, the central bank became the last lender. Its mission is to maintain financial and macroeconomic stability, and its functions are issued and supervised.
Now it may be back to the beginning. Digital currencies have put new demands on banks. Due to the emergence of Internet broadband, the central bank does not need to establish a large number of business outlets to directly deal with customers, which simplifies the business process fundamentally.
In a blockchain system that can effectively prevent theft, digital currency can be sent directly to the accounts of residents and institutions. The need to allocate capital flows through intermediaries has disappeared. Of course, for banks, there are fixed deposits. But the outlook is not bright. First, nothing prevents the central bank from opening fixed deposit accounts and paying interest. Second, given the current reality of negative interest, potential depositors may be reluctant to deposit money in banks if they have other options.
In addition, digital currencies have many other benefits for central banks. For example, monetary credit policies will be more effective, especially in the event of a crisis. After 2008, the central bank injected trillions of dollars and euros into its national financial system, but failed to restore economic growth to pre-crisis levels because most of the funds went to the stock market, and assets were not obtained from the stock market. . Valuation due.
During the epidemic crisis, the term “helicopter wasting money” was increasingly mentioned, that is, sending money directly to consumers. The most vivid example is sending $1,200 per person to eligible American adults. Digital currency is more suitable for this method of remittance.
Experts from the National Institute of Economics and the Philadelphia Reserve Bank pointed out that if the central bank can obtain additional financial deposit subsidies, then competition in the banking market will be greatly reduced, and the mediator may become a monopoly of savings. Commercial banks must be hit.
Countries that use digital currencies first will gain huge advantages because the financial system is more professional and efficient.
If currency digitization is an inevitable trend in the development of human society, then the digital currency issued by banks may be the most likely digital currency system at the moment, but it will also be the next outlet, but compared with the original currency, there is actually not much gap After all, he does not have the characteristics of digital currency, but it is more secure and reliable than digital currency itself (in a sense.)