The disadvantages of using digital currency
digital currency is a kind of unregulated and digital currency, which is usually issued and managed by developers and accepted and used by members of specific virtual communities. The European Banking authority defines virtual currency as a digital representation of value, which is not issued by the central bank or authorities, nor linked with legal currency. However, because it is accepted by the public, it can be used as a means of payment, or it can be transferred, stored or traded in electronic form
according to the notice on preventing the financing risk of token issuance, there is no approved digital currency trading platform in China. According to China's digital currency regulatory framework, investors have the freedom to participate in digital currency transactions at their own risk
warm tips: the above information is for reference only. Before investing, it is recommended that you first understand the risks existing in the project, and understand the investors, investment institutions, chain activity and other information of the project, rather than blindly investing or mistakenly entering the capital market. Investment is risky, so we should be cautious when entering the market
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The central bank's digital RMB has legal compensation, Digital RMB does not pay interest, and can be used in small, retail and high-frequency business scenarios. It is no different from paper money, and it is very convenient to use. according to relevant instry insiders, the use of digital currency does not need the Internet, and it can be said to be simple and convenient with a mobile phone, The cost is low
is there any security guarantee? In fact, the central bank's digital RMB has the nature of legal compensation. Digital RMB does not calculate and pay interest, and can be used in small, retail and high-frequency business scenarios. It is no different from paper money. Moreover, because of the nature of legal compensation, we can't refuse to accept the central bank's digital RMB. Moreover, the digital currency Research Institute of the people's Bank of China says that it can realize the circulation of digital currency between different clients in the transaction process by means of technical solutions, generating new digital currency and canceling old digital currency. After being excited for so long, it turned out that it was just an oolong. However, some people said that this warm-up is likely that the digital currency will be released soon
it is suggested to pay more attention to the mainstream digital currencies such as bitcoin, Leyte coin and dogcoin, as well as the application-oriented digital currencies in China.
Digital currency is a double-edged sword. On the one hand, the blockchain technology it relies on has been decentralized and can be used in other fields besides digital currency , which is one of the reasons why bitcoin is popular; On the other hand, if digital currency is widely used by the public as a kind of currency, it will have a huge impact on the effectiveness of monetary policy, financial infrastructure, financial market, financial stability and so on. Specific Wu Xiaoxia:
1. Impact on monetary policy
if digital currency is widely accepted and can play the role of currency, it will weaken the effectiveness of monetary policy and bring difficulties to policy-making
because digital currency issuers are usually unregulated third parties, money is created outside the banking system, and the amount of circulation depends entirely on the wishes of the issuers, which will lead to the instability of money supply. In addition, the authorities are unable to monitor the issuance and circulation of digital currency, which will lead to the inability to accurately judge the economic operation and bring trouble to policy-making, At the same time, it will weaken the effectiveness of policy transmission and implementation
2. Impact on financial infrastructure. The use of distributed ledgers also poses challenges to trading, clearing and settlement, as it promotes the disintermediation of traditional service providers in different markets and infrastructures. These changes may have potential impacts on market infrastructure other than retail payment systems, such as large payment systems, securities settlement systems or trading databases
3. The impact on financial intermediation and financial market in a broad sense. As a financial intermediary, banks perform the ties of acting supervisors and supervise borrowers on behalf of depositors
generally, banks also carry out liquidity and maturity conversion business to realize the financing from depositors to borrowers. If digital currency and distributed ledger are widely used, any subsequent disintermediation may have an impact on savings or credit evaluation mechanisms
4. The impact of security risks and financial stability
assuming that digital currency is recognized by the public, its use increases significantly and replaces legal currency to a certain extent, negative events such as network attacks on user terminals related to digital currency will lead to currency fluctuations, which will have an impact on the financial order and the real economy
in addition, the virtual currency based on blockchain technology is usually held by a few people at the beginning. For example, the first purchase of bitcoin in May 2010 was $25 pizza purchased by 10000 BTC, and the price of each bitcoin rose to $1200 in more than three years by the end of 2013
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extended materials
Amazon will launch digital currency project in Mexico. Amazon is recruiting software development managers for digital and emerging payments (DEP) to develop new payment procts that will enable customers to convert cash into digital currency
the digital and emerging payments sector intends to launch the proct in Mexico first. The follow-up will be extended to Brazil and India. It is reported that the digital currency project will completely focus on payment services in emerging markets