Recent Developments, Trends and Suggestions of Global Encrypted Digital Currency

Since the beginning of this year, the development of digital currency has been in full swing. Although the launch of Facebook’s stable currency Libra has repeatedly suffered setbacks, and regulators have repeatedly been cautious about Libra, the continuous monetary easing of the US dollar and the euro has made the encrypted digital currency market continue to rise. Bitcoin, Ethereum and Dog The encrypted digital currency market represented by Dogecoin has been under constant turmoil under the attention of celebrities such as Masco, and various small currencies that have achieved hundreds of times and thousands of times of income have attracted more investors to the encrypted digital currency market. This paper analyzes the basic development pattern of the global encrypted digital currency market, analyzes risks and problems, and puts forward countermeasures and suggestions. 1. The recent development of global digital currency On the whole, digital currency can be divided into legal digital currency (CBDC) issued by the state, global stable currency (GSC) anchored with sovereign currency or assets, and various types of encrypted tokens that are expanding in scale In 2020, these three fields are all showing rapid development trends, and are gradually rebuilding the global digital financial infrastructure. The new generation of information technology has led to a surge in demand for digital financial infrastructure, and the basic pattern of digital currency connecting the economy and society has begun to take shape. First, the legal digital currency research and development plan has been widely promoted. According to the survey questionnaire sent by the Bank for International Settlements (BIS) to 65 central banks around the world in the fourth quarter of 2020, 86% of the central banks indicated that they were conducting research or experiments on central bank digital currency (CBDC). Among them, 10% of the central banks have launched digital currency pilot projects, including the Bahamas, Uruguay, Ecuador, Venezuela, Thailand, Cambodia and other countries have issued digital currencies, and many emerging market countries such as China are also actively developing retail central bank digital currencies. Application testing. Second, the new digital currency war has attracted attention from all walks of life. In August 2019, Bank of England Governor McCartney proposed in both reports and speeches that "synthetic hegemonic digital currency" will replace the U.S. dollar as the world currency. In October 2020, the International Monetary Fund (IMF) released the report "Digital Currency for Cross-Border Payments: Macro-Financial Impact". Regarding the development possibilities of various digital currencies, it believes that the digital economy is centered on the platform and surrounded by the traditional economy. For banks, digital currency will affect the macroeconomy, international payments and the development prospects of future banks. The report mentions a paper by Princeton University on the theory of "digital currency partitioning", so the financial market may be split into multiple "digital currency zones" due to the competition of digital currencies, and a new digital currency war is in sight. At the beginning of 2021, Libra changed its name to Diem, changing from anchoring a basket of currencies to a single anchoring dollar. This move was interpreted as Facebook changed the attributes of "synthetic" and "package" in order to obtain the compliance license of the Federal Reserve and other institutions, and gathered services for the US dollar digitization strategy. The global cryptocurrency market value fell below $950 billion: Jinse Finance reported that according to Watcher.Guru’s tweet, the global cryptocurrency market value fell below $950 billion. [2022/9/19 7:05:17] Third, the rise in the price of encrypted digital currency drives the market to develop in depth. Entering 2021, Bitcoin has been soaring all the way, breaking through the $30,000, $40,000, and $50,000 mark one after another, and the mining machine market has also set off a wave of climax. Public figures such as Musk and institutions such as MicroStategy continue to "carry" digital currency on social media. Since the beginning of the year, Dogecoin has risen by more than 1380%, and its market value once exceeded 10 billion U.S. dollars, surpassing Bitcoin Cash, Chainlink, Litecoin and BNB to become the seventh largest digital currency in the world. On February 18, Canada's Toronto Stock Exchange (TSX) began trading BTCC, the first Bitcoin ETF product in North America. According to data from the exchange, the full-day trading volume exceeded 9.65 million copies, ranking among the top 10 trading volumes of all varieties on the Toronto Stock Exchange on that day. Much higher than the average first-day trading volume of newly listed ETFs in Canada. In addition to BTCC, another Bitcoin ETF called "EBIT" is also listed on the Toronto Exchange, which is a milestone event for the cryptocurrency and ETF industry. 2. Development trends (1) The development of national digital currencies in developed countries and emerging economies presents a trend of differentiation. Emerging economies hope to find new opportunities for development in this round of digital economy, and they are actively developing digital currencies. On the whole, emerging countries in the field of national digital currency research and development are faster than developed countries. Although the developed countries make frequent noises and the testing work continues to advance, they are very cautious in the actual application. The research and development of digital currency in Europe, the United States and other countries is still in the research and experimental stage. Only Singapore's Ubin and Canada's Jasper have progressed a little faster, and the United Kingdom has publicly diverted to private institutions and national dual-strategy mechanisms. The number of encrypted ATMs in the world has exceeded 7,000: According to data from the tracking website Coinatmradar, the number of encrypted ATMs in the world has grown to more than 7,000, distributed in 75 countries. This figure also includes machines hosting digital currencies other than Bitcoin (BTC), including assets such as BCH, ETH, Dash and LTC. (Cointelegraph) [2020/3/3] Digital currency is not only a financial infrastructure, but also a new type of financial tool, which will have a continuous impact on the macro economy, and its influence will not only not decrease, but will continue to increase. When banks and other financial institutions join the digital currency camp (currency bloc), their influence will continue to expand, and each time the impact is greater than the previous one. Due to the extremely high efficiency of digital currency cross-border transactions, which accelerates and magnifies the impact of capital flows, the systemic risk of this digital age is a problem that any country must seriously consider when developing CBDC. For countries with weak legal currency, blindly developing CBDC is not a good choice. (2) The attribute of encrypted digital currency as a reserve asset is grabbing the market share of gold. The Block Research encrypted transaction data shows that the transaction volume of encrypted currency exceeded 1 trillion US dollars in February, setting a new record. As of February 26, the monthly trading volume was US$1.05 trillion, an increase of US$143.9 billion or 15.9% from January. A wave of frantic bitcoin speculation weighed on gold prices. Despite the high volatility, Bitcoin has led the global market since September 2020, and has still gained nearly 300%, far outperforming other similar assets. Some retail and institutional investors in Citigroup turned to Bitcoin and other Digital currency, believes that "Bitcoin and other digital currencies seem to be grabbing gold's market share. Quotes | The total market value of global cryptocurrencies is about 223.104 billion US dollars: According to AICoin data, the total global market value of cryptocurrencies has risen slightly and is currently about 223.104 billion U.S. dollars. Bitcoin ranks first in the cryptocurrency market, with a market value of about 149.4 billion U.S. dollars, accounting for 66.96% of the current market value; Ethereum ranks second, with a market value of 19.4 billion U.S. dollars, accounting for 8.67% of the market value; Ripple ranks third, with a total market value of $10.8 billion and a market share of 4.84%. [2019/10/3] The Citi analyst team believes that Bitcoin is at a "turning point", and it may become everyone's favorite international trade currency, or face a "speculative implosion". After being sought after by companies such as Tesla and MasterCard, Bitcoin may be at the beginning of a major transformation into the mainstream. This situation even forces the Western Group of Seven (G7 ) The central bank is considering launching an official digital currency. In China, the Malaysian branch of China Construction Bank, Meitu, Weilai, etc. have all publicly announced to carry out bitcoin transactions. (3) Under the fluctuation of digital currency prices and the surge in transactions, countries are facing more severe regulatory situations. According to the monitoring of nearly 100 major exchanges and wallets around the world, the number of domestic users participating in on-chain transactions of mainstream virtual digital currencies such as Bitcoin (BTC) and Ethereum (ETH) in 2020 (that is, transactions written into the blockchain) are respectively 310,000 people, 110,000 people, and the number of virtual digital currencies traded were 1.45 million and 7.71 million respectively. Calculated according to the transaction unit price on December 31, 2020 (BTC 186,000 yuan/piece, ETH 5,000 yuan/piece ), the virtual digital currencies such as BTC, ETH, and USDT traded by domestic users in 2020 are equivalent to RMB 269.7 billion, 38.5 billion, and 104.6 billion respectively. However, the seemingly hot market is actually undercurrents. Frequent. As of the morning of March 1, a bitcoin was quoted at around US$45,000, which has fallen by more than US$10,000 within a week compared to the highest point of US$58,000 on February 22. Quotes | The total market value of global cryptocurrencies is stable at Above US$130 billion: According to AICoin data, the current global cryptocurrency market value is approximately US$137.937 billion. Bitcoin ranks first in the cryptocurrency market, with a market value of approximately US$69.4 billion, accounting for 50.31% of the current market value; Ethereum ranks second, with a market value of US$15.6 billion, accounting for 11.27% of the market value; Ripple ranks third, with a total market value of US$14.8 billion, accounting for 10.73% of the market value.[2019/1/9] US Securities and Exchange Commission (SEC) has previously rejected multiple bitcoin ETF applications, fearing that bitcoin prices may be manipulated, and Worried about Bitcoin illiquidity. Andrew Bailey, Governor of the Bank of England, publicly stated at the Davos World Economic Forum's "Digital Currency" panel discussion on January 25 that supervision should pay attention to digital currency financial crimes, and that the volatility of digital currencies and the "stability of value" Sex" expresses concern. European Central Bank President Christine Lagarde and US Treasury Secretary Yellen also made relevant remarks in January. (4) Large-scale Internet companies take advantage of digital currency to develop new distributed business models , are trying to launch a new digital financial ecology with new technology formats such as online social networking and new energy, and avoid barriers from supervision and traditional finance. Large-scale domestic Internet companies without exception use blockchain technology to build a digital financial ecosystem under the alliance chain architecture. Based on their data accumulation advantages in the financial retail field, what restricts them from further dabbling in the financial industry is only the "business" of various businesses. License" issue. Quotes | The global market value of cryptocurrencies is RMB 1.7586 billion, and Bitcoin accounts for 40.43%: According to AICoin data, the current global market value of cryptocurrencies is RMB 1.7586 billion, of which Bitcoin ranks first with a market value of RMB 711 billion, accounting for 40.43%. 40.43%; ranked second is Ethereum, with a market value of 291.6 billion yuan, accounting for 16.58%; ranking third is Ripple, with a market value of 115 billion yuan, accounting for 6.54%. [2018/7/14] At present, the platform economy anti-monopoly-related guidance draft has been publicly released. Large-scale Internet companies seek to overcome the traditional business model of cooperation from the perspective of equity and equity from a technical point of view, and have taken advantage of their close relationship with digital currency. Blockchain technology builds a new distributed business ecosystem. Take the "AntChain", which was renamed on July 23, 2020, as an example. It claims to technically support a scale of 1 billion accounts, has the ability to process 100,000 cross-chain information per second, and has more than 100 million daily active-zce "uplinks" per day. Tencent, JD.com, Baidu, etc. also have a similar business structure. Such a large amount of transaction information, transaction content, and transaction amount span across departments and industries, and there is no new position and attitude for supervision of the new model. Some passive open interface problems that have appeared in cross-border digital token transactions and platform economic supervision will reappear, and the unknowable risks under the cross-scenario are repeated and accumulated again. 3. Enlightenment and Suggestions (1) Actively respond to the new digital currency war in the field of cyberspace and build a new digital financial order Caught in a dilemma, more countries will face a new type of digital currency war scenario, and digital currency will become a new field of international competition strategy for all countries. All countries are still in the exploratory stage, and all kinds of monitoring are still post-event supervision, and technical blocking cannot fundamentally curb the scale of cross-border transactions. Our country should stand at the height of network security and informatization as a national strategy to actively respond, recognize that the essence of the digital currency war is still the competition of national digital currencies, and avoid being "stuck" after "one size fits all". Actively establish a response mechanism for information security, network security, financial security, and national security strategic dimensions, enhance the ability to respond to new digital currency wars, and guide and participate in the construction of a new digital financial order in cyberspace. (2) Actively solve the problem that the boundary between the Internet and finance is becoming increasingly blurred, and cultivate a new ecology of digital currency. Under the background of digital currency, the boundary between finance and the Internet is increasingly blurred, and the Internet and finance are integrated. At present, the development of the financial technology industry, which is an important technical support for digital currency, has encountered many problems, such as data circulation, data value, data ownership and data application, and other technical and legal issues; A large number of data "barrier lakes" are formed on the chain, supply chain, capital chain, data chain, information chain and talent chain, and the gray industrial chain of the data industry leads to a large number of privacy and security issues. There is an urgent need for the government to lead the reform of data elements, clarify the policy orientation and the bottom line of the boundary, and the market and the government work together to break through data barriers, improve the value of data utilization, and standardize data application scenarios. Especially for financial technology and other industries with complex names, huge scale, intertwined risks, and difficult to penetrate structures, it is necessary to adhere to integrity and innovation, strengthen monitoring of distributed financial services that are still in the blank of supervision, and actively solve the legal problems caused by the blurring of industry boundaries. Inadequate laws and regulations, regulatory gaps, promote the development of new businesses, new models and new formats, solve the difficulties and confusion in the development of emerging industries, and cultivate a new ecology of the digital currency industry. (3) Establish digital renminbi application standards and enhance the influence of sovereign digital currency. As a national financial infrastructure, my country's legal digital currency (DCEP) has begun pilot use. At present, the DCEP issued by the People's Bank of China is positioned to replace the cash in circulation, and it should take the initiative to establish application standards and interface specifications based on the national sovereign digital currency to ensure the safe use and internationalization of the national sovereign digital currency. Based on the promotion of the digital renminbi One Belt One Road strategy and national strategic development, with the help of financial information security technology, improve the security protection capabilities of the national digital currency at the circulation level. Construct national anti-money laundering, anti-terrorist financing and other risk management standards and application interface specifications based on cash digitalization, make technical reserves for the wide application of national digital currency, and grasp the international voice of digital currency.

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