Is digital currency the development trend of future currency?
Digital currency can alleviate the currency crisis faced by unstable economies, especially countries with severe inflation. In a world dominated by digital currencies, the traditional global financial system is facing a difficult time of change. This difficulty is manifested in the fact that traditional global finance must face some overwhelming needs in developing countries, some of which are It is difficult for the public to obtain stable banking business. For example, some laborers who work abroad want to remit funds back to China, and they have to face the problem of high exchange rates and remittance fees. This seemingly unfair phenomenon has existed for a long time.
According to the survey, more and more developing countries have shown great interest in digital currency. In November last year, Turkey fell into an inflation crisis, and the inflation rate soared to 25%. In the face of soaring prices of daily necessities such as food, clothing, housing and transportation, Many young people have begun to exchange their assets into digital currencies such as Bitcoin. In Nigeria, a growing number of consumers are starting to see Bitcoin as a viable alternative to the U.S. dollar.
Inflation is a common crisis in some unstable economies at present. Inflation is simply the excessive issuance of money, resulting in worthless money, and once the money is worthless, prices will soar. Currency spam is a relatively subjective behavior, which is the deliberate or unintentional behavior of the national economic authority. In other words, this is an act of centralized authority. Once the national authority issues additional currency blindly, the people will inevitably face an "inflation crisis."
Moreover, the current currency system is dominated by the U.S. dollar, which cannot restrict the unlimited issuance of U.S. dollars to the outside world. In 2008, the United States' economic growth model of excessive debt consumption and additional currency issuance led to excessive economic expansion, which not only affected its own economic development, but also triggered global inflation and financial crises. The background of the birth of Bitcoin was the financial crisis in 2008. At this time, people realized the long-standing drawbacks of the international monetary system, which gave birth to the idea of decentralization and constant total amount.
The emergence of Bitcoin reflects the decline of people's trust in the existing monetary system from the side. People are beginning to realize that not to mention unstable countries, even the "big brother" countries like the United States cannot ensure the operation of the international monetary system, so People began to advocate decentralization, advocating a more free and open currency concept. In other words, even if there was no Bitcoin at that time, there would be other similar forms of currency.
The concept of digital currency represented by Bitcoin, to a certain extent, conforms to the demands of change (or satisfies people's beautiful imagination), and naturally has a certain basis for survival and development. With the continuous improvement of digital currency infrastructure, digital currency transactions have become convenient and simple. At present, OKEx provides Bitcoin, Litecoin, and stable currency exchange and transaction services for users around the world. The legal currency zone supports RMB, British pound, Vietnamese Dong, Russian Ruble, Turkish Lira, Euro. This means that billions of people around the world can use their local currency to convert funds into digital currency, providing consumers in some developing countries with financial alternatives and reducing the high transaction fees in the circulation of funds.
However, the current criticism of Bitcoin is that it is slow to process transactions, and its price is easily affected by the market and is very unstable. In order to counteract these effects, people have invented stablecoins, which are generally pegged to the U.S. dollar. Moreover, it is actually very troublesome to convert fiat currency into cryptocurrency, especially when the amount of funds is large, and stable currency acts as a medium at this time. However, the current stable currency is still in the hands of a certain company or institution. For example, the oldest stable currency USDT belongs to Tether.
However, it should be noted that whether it is Bitcoin or stablecoins, the digital currencies we currently trade on trading platforms cannot be regarded as real currencies, nor can they become real currencies. They are more like an investment behavior. Why do you say that? It's very simple, because currency is an important symbol of state power, and it is impossible to hand it over to a certain company or an institution.
However, the underlying technology of digital currency, the blockchain, provides a reference for the digital currency issued by the central bank. The digital currency issued by the central bank is undoubtedly a real currency with legitimacy and stability. Although the central bank-led digital currency is still unable to avoid the several currency crises we mentioned above, it is safer and more transparent to use the traceability and smart contract features of the blockchain.
To sum up, today we are talking about "why digital currency is the development trend of future currency". From the perspective of currency, this matter must be done by the central bank. The current digital currency, I prefer to say that it is an investment trend, a brand new investment method.
