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Wang Yongli: The Essence and Context of "Digital Currency"



Right now, the digital currency that is about to emerge has once again become the focus of public opinion from all walks of life. It started in early 2009, when a brand-new decentralized network "digital encryption currency" - "Bitcoin" was born, and then promoted the concept of various "digital currencies" around the world. From the birth of digital currency, to the "stable currency" linked to a single or a basket of legal currencies, to the development and design of "legal digital currency" by central banks of many countries, the pattern is constantly being refurbished, and it has even become a financial hotspot in which countries compete with each other. However, the coexistence of multiple "digital currencies" just shows that people lack sufficient understanding of the nature and development logic of "currency", and it is urgent to accurately grasp the essence and development direction of "digital currency". In fact, currency has been moving towards digitization. Since the birth of currency, with the development of related technologies, its manifestations and operation methods have been constantly evolving, aiming to continuously improve operational efficiency, reduce operating costs, better function and promote economic and social development. Throughout the history of world currency, the basic context of currency development and evolution is: natural physical currency (such as special shells, bones, feathers, etc.) - standardized metal currency (gold coins, silver coins, copper coins, etc.) - metal standard paper money (Tokens) - pure national credit currency (also known as sovereign currency, legal tender). The fundamental direction of development is dematerialization and digitization. Among them, with the development of information technology, the form and mode of operation of credit currency are constantly evolving, and the process of cashless and digitalization is accelerating. Mainly manifested in: cash currency (banknotes and metal coins) - deposit currency (reflected as bank deposits, with deposit certificates, passbooks, etc. , requires a lot of manual operation) - electronic money (still reflected in deposits in banks or payment institutions, but its storage and payment mainly rely on electronic carriers, such as bank cards, electronic banking or mobile payment wallets, etc., through electronic information transmission and processing, the automation level of currency receipt and payment and compliance monitoring has been greatly improved) - digital currency (the form of expression is more digital and intangible, and the mode of operation is more networked, open-sourced and intelligent. It is still in its infancy and is still in development. exploring). Wang Yongli, former vice president of the Bank of China: digital renminbi will lay an important foundation for the future development of the digital economy and the confirmation of asset rights: On October 24, Wang Yongli, chief economist of Neptunus Group and former vice president of the Bank of China, was quoted by Caijing magazine , "Global Wealth Management Forum 2021" sponsored by "Financial Think Tank" said, "The biggest change brought about by the digital RMB lies in its manifestation and operating mechanism. Protection lays an important foundation." (Sina Blockchain) [2021/10/24 6:10:49] At present, there are various explorations of "digital currency". The emergence and development of credit currency has greatly enhanced the flexibility of money supply and total control. However, affected by various factors, it is heading towards excessive currency issuance, total loss of control, and continuous accumulation of monetary and financial risks—causing more and more serious financial risks. The direction of the current currency and financial crisis is constantly advancing, prompting people to rethink and explore innovative currency operating systems and mechanisms. Among them, the outbreak of the subprime mortgage crisis in 2007 and the subsequent global financial crisis has promoted the emergence of various "digital currencies" one after another, and there have been great variations. According to the order in which their concepts appeared, the current "digital currency" mainly includes the following categories: 1. The brand-new network platform has an endogenous "encrypted digital currency". Its representative is "Bitcoin", which was launched in early 2009 and has been running until now. It is launched and managed by a computer system in accordance with set principles within a specific network system, avoiding government and individual intervention (decentralization), and a pure currency without any carrier. "digital currency". On the basis of Bitcoin, more than 1,700 encrypted digital currencies such as Ethereum and Litecoin have been developed. During the development process of this network endogenous encrypted digital currency, the problem of sharp price fluctuations was exposed, and the "digital stable currency" linked to legal tender was born. 2. Linked to the equivalent value of a single legal currency, it is necessary to purchase the linked currency as a reserve, which is mainly used in the "digital stable currency" of a specific network system. Such as USDT, USDC, GUSD, etc. 3. Structurally linked to a basket of fiat currencies, it needs to be exchanged with the linked currency as a reserve, and is mainly used in a super-sovereign "digital stable currency" of a specific network system. Such as the envisioned eSDR, Libra, etc. Voice | Wang Yongli: Risks in financial transactions are extremely difficult to control if there is no strict supervision: According to Mars Finance News, on the afternoon of November 3, the Beijing Gold Expo Blockchain Forum and the "2018 China Blockchain Application Research Center First Annual Conference" were held in Beijing . Wang Yongli, the former vice president of the Bank of China, said that if financial transactions are not strictly supervised, scammers are inevitable and the risks are extremely difficult to control. He calls on the public to rationally view digital currencies and implement effective supervision to prevent vicious consequences. [2018/11/3]4. The "central bank (statutory) digital currency" (CBDC) that is being explored or tried uses information technology to promote the digitization of legal tender. Many countries are now developing CBDC. Among them, the digital currency DCEP of the Central Bank of China has entered the testing stage. This raises an important question: are these all "digital currencies"? Although there are many concepts of "digital currency", in a strict sense, only "central bank digital currency" can really exist and develop as "currency". This is because: the reason why currency must develop from natural physical currency (including regulated metal currency) to pure credit currency has its inherent logic and laws. The so-called "currency" is the "currency" of "goods", and "currency" is the unit of value and the way of expression, which determines that the core function of currency is the measure of value, which is for goods (and later developed into labor services). Those who exchange services play a role as a medium of exchange. In order to give full play to the value measure function of currency, it is necessary to maintain the basic stability of currency value. To maintain the basic stability of the currency value, it is necessary to ensure that the total amount of currency in a country can correspond to the scale of tradable social wealth that can be protected by law within the country’s sovereignty, and can change with the increase or decrease of tradable social wealth. , with adjustability and flexibility. In this way, since the actual supply of traditional natural physical currency depends to a greater extent on the natural storage, development or processing of this kind of physical currency, it is difficult to adapt to changes in the scale of tradable social wealth, and it is easy to cause serious problems. Inflation or deflation, even in the trade between countries with different currencies, a serious imbalance in trade can easily lead to a serious imbalance in currencies and lead to mutual wars. Even the paper currency under the gold standard also has the "Triffin problem". Therefore, with the development of the market economy and the growth of tradable wealth, physical currency must withdraw from the currency stage and return to its source of social wealth, and its value also needs to be marked with a new currency. Voice | Wang Yongli: Bitcoin cannot become a real currency: According to China Business News, former Bank of China Vice President Wang Yongli said when talking about the blockchain, there is no problem with the blockchain itself. Time will affect the operation of finance. If it is not well positioned and properly supervised, huge problems will arise. An endogenous cryptocurrency such as Bitcoin cannot become a real currency. Wang Yongli believes that Bitcoin can only become a community currency or business circle currency on the Internet. The digital currency or legal digital currency dominated by the central bank cannot be a brand-new currency system like Bitcoin and Ethereum. It can only be digitized and intelligent of the existing legal currency. [2018/11/3] Currency must be separated from natural objects and transformed into pure value units or tokens, which can no longer have practical value and can become pure numbers. But the reason why it can be accepted by the society is that a country's currency is based on the support and credit of the entire country's tradable wealth, and is protected by national sovereignty and laws. Therefore, this currency is called "credit currency". , also known as "sovereign currency" or "legal tender". The "credit" of credit currency is the credit of the whole country, not the credit or debt of the government (fiscal) itself, and is not guaranteed by government taxation (taxation can only provide guarantee for government debt). Currency is no longer the credit or liability of the central bank that issued the currency (the central bank no longer promises that currency holders can use the currency to return gold or anything else to the central bank), but more like a legal warrant of the value of social wealth (wealth securities change). From this, it can be affirmed that it is impossible to build and operate a super-sovereign world currency when national sovereignty still exists and the world has not yet achieved integrated governance (Hayek's idea of "denationalization of currency" is difficult to realize) . Specifically: First, the endogenous "digital currency" such as Bitcoin cannot become a real currency in circulation. Compared with gold, Bitcoin is highly closed: the total amount and the new supply per unit time are strictly locked by the system and cannot be artificially controlled. It is difficult to adapt to the growth of social wealth; there is appreciation expectation, which is conducive to speculation, but it violates the law of currency development and operation logic, and it is retrogressive rather than innovative at the currency level. It cannot become a real currency in circulation, but can only be a kind of Invested digital assets, or become "community currency" or "commercial currency" used by specific online communities; as "community currency", it is still subject to financial supervision (the focus is on the exchange link with legal tender, and the custody link can also be added) . Voice | Wang Yongli, President of the Strait Blockchain Research Institute: It is difficult to use the blockchain for credit in the impossible triangle: Wang Yongli, President of the Strait Blockchain Research Institute and Chairman of the Shared Finance 100 Forum, said in the China Fortune Forum, At present, there is an impossible triangle in the blockchain, that is, decentralization, high efficiency and security cannot be achieved at the same time. At the same time, the future development of blockchain will also face a global standard issue. Regarding the application of blockchain, Wang Yongli said that considering the characteristics of various aspects, the application of blockchain in credit is still difficult and needs a lot of exploration, but it has great prospects for one-way applications such as games and donations. [2018/7/9] Bitcoin and other purely network-generated "digital coins" are not gold, although they simulate gold, so there are opportunities for speculation, but the risks are very high! The decentralized and fully-enclosed blockchain model adopted by Bitcoin consumes a lot of energy and has low efficiency. It is difficult to solve practical problems, and it is difficult to have vitality. The development of blockchain needs to jump out of the Bitcoin paradigm! Second, the "stable currency" linked to the equivalent value of a single legal currency can only be a token. In the case that only one legal currency can be circulated in a country, it does not mean that it is absolutely not allowed to be given special rights and obligations within a certain range. Tokens" existence and use. For example, in China, the legal currency is RMB, but some canteens are still allowed to have their own meal tickets/cards, some shopping malls have their own shopping vouchers/cards, and some e-commerce platforms have their own points or "Token", but these things only It can be a token of RMB, which can only be used in a certain community or business district (its value depends on the breadth and depth of the application business circle). legal tender. Third, the idea of a "super-sovereign currency" structurally linked to a basket of currencies is difficult to succeed. In June 2019, Facebook released the Libra white paper, envisaging Libra to be structurally linked to five legal currencies, of which the US dollar accounts for 50% (with the SDR currency basket The difference is that the Libra currency basket does not include the RMB, but instead includes the Singapore dollar), and claims that "Libra's mission is to build a simple, borderless currency and financial infrastructure that serves billions of people", which will be composed of Hundreds of large international companies form the Libra core association to manage independently, "making cross-border remittances as safe and convenient as sending text messages." Wang Yongli, academic member of the International Monetary Institute of Renmin University of China: The most important thing for the operation of the Internet blockchain is to ensure that real-world assets or values can be transferred: The 2018 International Blockchain Development and Innovation Conference was held in Beijing on the 28th. Authoritative experts in the industry, Well-known investors, corporate technology elites, and industry researchers gathered together to discuss the present and future of the blockchain from multiple fields such as industry applications, industrial policies, and investment directions. Wang Yongli, an academic member of the International Monetary Institute of Renmin University of China, believes that the most important thing for the operation of the Internet block chain is to ensure that real-world assets or values, various physical documents and certificate images, etc. can be efficiently and accurately pushed to the Run online, and ensure its legality, authenticity, accuracy, and completeness from the source. [2018/4/29] Based on the fact that the Libra Management Association may have more than 3 billion global users, many people take it for granted that the launch of Libra will be widely circulated and used by users all over the world, becoming a new super-sovereign currency, which will strengthen The international status of the U.S. dollar and the replacement of many non-basket currencies will have a major impact on the international monetary system and the internationalization of the RMB. This has indeed produced a huge sensation, but there are actually many utopian ideas: in terms of currency design, Libra is not more innovative than SDR, even in currency exchange, dynamic control of structure, management of reserves, and handling of exchange gains and losses , There are more difficulties and challenges than SDR in terms of practical use and convenience. The issues that need special attention are: A. Although Libra is mainly based on US dollars, it is definitely not US dollars. If Libra can be widely circulated, the first impact will be the US dollar as the international central currency, not other currencies! Therefore, this idea cannot be supported by the United States. This is like SDR, although it is also dominated by US dollars, it still cannot be supported by the United States to become a super-sovereign world currency, but can only be used as a special government reserve asset! B. Libra lacks national sovereignty and legal protection, and there is no clear social wealth corresponding to it. Its currency value as a currency is difficult to stabilize. C. Even if the euro becomes the legal currency in the region, the original sovereign currencies of its member states must be completely withdrawn, and the two cannot coexist at the same time! It can be seen that it is easy to launch tokens (such as USDT) that are pegged to the legal tender of different countries and used separately, but it is difficult to achieve a structural peg with a basket of currencies. Even if the International Monetary Fund (IMF) envisages using new technologies to create eSDR, it is also difficult to become a super-sovereign currency and circulate freely in its member countries! To sum up, from a strict "currency" point of view, "digital currency" can only be the digitization of legal tender in the end, and the fundamental development can only be "central bank digital currency". Moreover, the central bank's digital currency can only be the digitization of legal tender, and cannot be another new currency other than legal tender.


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