A few years ago, many of us did not hear about the existence of digital currency. Nevertheless, today it is actively used as a means of payment or preservation of value, moreover, the governments of many states are seriously thinking about creating their own national cryptocurrencies.
According to Liu Ihua, a researcher at the Taihe Analytical Center, in the short term, cryptocurrency will not be able to crowd out paper money. However, he, like many other industry experts, believes that in 10-15 years, as the economic sphere changes, cash will be completely replaced by electronic.
First digital currency
The media has repeatedly suggested that China may become the first country to issue its own national digital currency. This is due to the high level of technology development in the country and the desire of the Chinese government to get away from the dominance of the US dollar. An additional impetus to the creation of the digital renminbi was the trade war between China and the United States.
The Chinese cryptocurrency received the working name DC / EP (Digital Currency / Electronic Payment), and its full launch is planned to be implemented by mid-2021. It is logical that other states will follow China, and it is quite possible that now we are on the verge of the entry into the new era of state cryptocurrencies.
What will the digital yuan be like
Liu Ihua explains that the creation of DC / EP should not be confused with the issuance of a new currency. It will be a replacement for paper currency, its digitalization. Cryptoyuani will perform the same function in the economy as paper yuan.
There is a fundamental difference between traditional cryptocurrency and DC / EP. If, for example, bitcoin is completely decentralized and its price is based solely on the algorithm and consensus, then crypto-yuan will have real security in the form of a state loan.
According to representatives of the Central Bank of China, cryptocurrency issued domestically, supported by the state and expressed in the national unit of account, will help reduce the production of private cryptocurrencies and ensure a stable financial situation of the country.
It can be seen that the DC / EP concept is different from the classic decentralized cryptocurrency. Users are unlikely to notice the difference between using regular cashless payments and a new digital currency. But the blockchain system will provide the state with total control over all monetary operations in the country.
On the one hand, this will eradicate online fraud and increase overall financial security. On the other hand, the Chinese government has already been criticized on the Internet for trying to rob citizens of their financial freedom and interfere in their personal lives.
One way or another, the refusal of cash payment is what the world economy will come to sooner or later, and China in this area has every chance of becoming the first.