12.8 Prospects of digital currency in internationa...
The future of digital currency can be bright if some institutional-formal conditions are met.The advantages of using digital currency in trade facilitation, cost reduction and others are recognized by the majority of academics.Bitcoin and other digital currencies have the potential to replace traditional and new payment methods.But in order to achieve this and become the dominant force in the global payment system, they must provide a distinctive individual value, deal with and overcome a number of critical challenges, such as formal regulatory issues.It is unlikely to happen in a short period of time.Also, banks should carefully consider the technology underlying these digital currencies as a potential generic new way of transferring ownership of the value over the long term.On the other hand, we have seen that digital currency as a new rise in society constitute a new way of transparent and fluid flow of resources that can spur every economy.
The advances in information and communication technology enabled the development of new forms of electronic payment, both in the real world with card products and in the virtual world with software products.The reason for the growing prevalence of these products is precisely their great perceptions compared to the traditional way of payment.However,statistics confirm that the evolution of e-money is in the initial phase, and that cash is still the most important form of payment for retail transactions.Cash has not yet been replaced by any form of electronic payment.One of the reasons is precisely the fact that e-money is a rather sophisticated form of payment that requires some investment in new technology among retailers, as well as developing new experiences among the users.Therefore, the use of electronic money does not extend significantly.
Bitcoin is controlled by all users, and they are free to choose the software of their choice.Therefore, in order to maintain compatibility, users must change this, that is, they should use software that meets the same rules.Only Bitcoin can work properly with a complete consensus among all users.The Ethereum has enabled us to get to know the extra possibilities of cryptocurrencies through Smart Arrangements.They could relieve individuals of the limitations of the legal system and big business.
Taking into taccount the success of cryptocurrencies, there is an opinion that consumers,consortiums or large financial institutions would not be successful in launching cryptocurrencies.Further, here it is believed that its success will be greater if the digital currencies are launched by central banks.So, we should be thinking using this tool more efficiently for the world economy.In more detail, central bank has the authority to bring participants together and will increase the attractiveness of fiat money for exchange in clearing,payments and settlement.In this moment some experts asked two question regarding cryptocurrency and central banks.The first is linked with the deepness and preciseness of policy and economic implications of launching a central bank-issued cryptocurrency.The second issue is focused on the impact of central bank-issued cryptocurrency on the banking system.
1.Digital currency is a type of currency that has no physical form and only exists in digital form.Virtual currency is a type of unregulated digital currency that is only available in electronic form.
2.A cryptocurrency, a subset of digital currencies, is a medium of exchange that depends on cryptography to secure transactions and to control the creation of new units of currency.Bitcoin is a cryptocurrency created in 2009.And a blockchain is a data structure that serves as a public digital ledger and is shared across a distributed network of computers.
3.DCEP is a national digital currency of China built with Blockchain and Cryptographic technology.This could be considered the world’s first Central Bank Digital Currency (CBDC)as it is issued by state bank—People’s Bank of China (PBOC).
4.In 2019, the head of the US Federal Reserve Jerome Powell confirmed that the Reserve has analyzed whether a digital currency makes sense for the US and that it has been considering several options.It turned out that the Federal Reserve has indeed “assessed and continues to carefully analyze the costs and benefits of pursuing such an initiative in the US”.It is currently exploring whether a digital currency would “lead to safer, less expensive, faster,or otherwise more efficient payments”.