Virtual Currency is also called Digital Currency. In the past, almost all countries disagreed with it, but now the attitude of most people has changed. Even United States and China are also working hard for “digital currency”.
New York, NY (Merxwire) – Bitcoin is the originator of cryptocurrency. It was born in 2009 due to the well-known financial subprime crisis storm and was invented by a mysterious person under the alias “Satoshi Nakamoto”. Bitcoin is currently the most widely used and recognized virtual currency, and it is also the most famous virtual currency, and it has become the best case of successful virtual currency circulation. In order to make currency international, both China and the United States are accelerating the digitization of currencies.
Definition of Virtual Currency
In 2012, the European Central Bank defined virtual currency as “a type of unregulated, digital money, which is issued and usually controlled by its developers, and used and accepted among the members of a specific virtual community”
In 2013, US Financial Crimes Enforcement Network (FinCEN), a bureau of the US Treasury, in contrast to its regulations defining currency as “the coin and paper money of the United States or of any other country that is designated as legal tender and that circulates and is customarily used and accepted as a medium of exchange in the country of issuance”.
In 2014, the European Banking Authority defined virtual currency as “a digital representation of value that is neither issued by a central bank or a public authority, nor necessarily attached to a fiat currency, but is accepted by natural or legal persons as a means of payment and can be transferred, stored or traded electronically”.
Chinese government changed attitude
Cryptocurrency, led by Bitcoin, after its birth using blockchain technology, is something that is a great enemy to governments, even the enemy of national currencies, because it may steal the power of the government, including the power of coining coins and national finances. Absolute control over regulatory tools. Some things Bitcoin did, and more government agencies were frightened by Facebook’s recent Libra project and avoided it.
It doesn’t matter if the enemy is powerful. Besides fleeing, China has chosen another path: join him if he fails to win. Digital Currency Electronic Payment(DCEP) is the world’s first officially announced by the country to use “blockchain technology” (in a broad sense) to create and issue cryptocurrency.
DCEP will adopt a two-tier management system, that is, the People’s Bank of China will first exchange DCEP to banks or other financial institutions, and then these institutions will exchange them to the public. The significance of DCEP is that it is not a digitization of existing currencies, but a replacement for cash in circulation. It greatly reduces the degree of account reliance on the transaction link, which is conducive to the circulation and internationalization of RMB. At the same time, DCEP can realize the real-time collection of data such as currency creation, accounting, and flow, which provides a useful reference for currency release and monetary policy formulation and implementation.
The U.S. is speeding up
In view of China’s recent big moves, what exactly does the “digitized dollar” do?
The project will focus on three main areas:
1. It will encourage people to conduct research and public discussion on the potential advantages of Digital currency.
2. Convene thought leaders and actors in the private sector.
3. Propose feasible solutions to support potential models in the public domain.
The “Digital U.S. Dollar Project” will also develop a framework and further explore the design plans and methods of designing digital currencies through the review process, including holding stakeholder meetings, roundtable discussions, and publicizing Forum etc. While seriously considering the government’s core interests, the project will focus on a series of key guiding principles based on the support of existing Fed-related projects.
The “Digital Dollar Project” will eventually find a clear central bank digital currency solution that can not only enhance the effectiveness of monetary policy and financial stability, but also provide the required scalability in retail, wholesale and international payments , Security and privacy, support integration with existing financial infrastructure.
Virtual currency is not only the current trend, also the future world, this is a fact without doubt. Although currency circulation will be more convenient in the future, many preventive measures still need to be formulated and monitored by governments in order to prevent monetary policy from losing order.
Reference materials:
https://en.wikipedia.org/wiki/Virtual_currency
https://www.globaltimes.cn/content/1170739.shtml
https://www.ledgerinsights.com/digital-dollar-project-unveils-digital-currency-model-cbdc/