Beijing Business Daily Commentary: Digital currency, a blind man touching an elephant

Source: Beijing Business Daily

Author: Han Zhe, Chief Commentator of Beijing Business Daily

Digital currency is about to be born, but we are still groping in the dark.

Recently, the CCB App launched a digital currency personal wallet. Although it was only on display for a few hours, the market was quick to react and there was a lot of talk about it.

Since the beginning of this year, the development of digital currency, which has been under study for six years, has accelerated dramatically. In the past month, there have been developments almost every week, and pilot projects have been launched everywhere. In this regard, the central bank is more anxious than ordinary people.

This is a monetary experiment that has no rules to follow in the world.

Digital currency is digitized RMB cash, which is benchmarked against M0. This digital currency is not decentralized Bitcoin or Libra, but sovereign currency and legal tender. It is the same as paper money and coins, the only difference is the medium. Paper money and coins need to be placed in a wallet, while digital currency needs to be placed in an app.

So the question is, what are the application scenarios of digital currency?

Although experts have painted a lot of cakes, they are actually not very imaginative. They are all inferring the unknown based on the known, and "feeling the elephant" within their own cognition. The idea that digital currency can promote the internationalization of the RMB and alleviate "currency over-issuance" seems to be "empty talk". In fact, the most important thing for the internationalization of the RMB is capital convertibility and free circulation, and digital currency is just a minor technical issue.

As for protecting privacy and improving anti-money laundering capabilities, these features are not disruptive and are more like “free gifts when you recharge your phone bill.”

After much thought, everyone always feels that there is some overlap between digital currency and third-party electronic payment methods such as WeChat and Alipay. Whether the two are complementary or alternative in terms of scene application is still a matter of hesitation and murmur.

Ant Group has already pointed out the possible risks of central bank digital currency in its prospectus, although it is still difficult to assess the impact on the company's business, finances and operations.

We are already used to third-party electronic payments such as WeChat and Alipay, which can meet the needs of most scenarios in life. The so-called dual offline payment of digital currency, that is, as long as there is electricity, even if the network is disconnected, you can pay, which seems to be a useless dragon-slaying technique. China's mobile Internet is very developed, and it is really difficult to think of a scenario without the Internet. Even if there is, it is likely to be a weak business scenario.

Since the current WeChat and Alipay can solve most application scenarios, digital currency has to face the question of what it can bring to the people?

So far, no expert has been able to give a clear answer. We are crossing the river by feeling the stones, or like a blind man touching an elephant. We get on the bus first, then buy the ticket. We have this thing first, then ask if it is useful.

Most people can only make money within their own cognitive scope. The leaders may not be able to explain clearly where the application scenarios of digital currency are. When Alipay first came out, it did not develop into a giant according to the plan, but was full of trial and error, as well as luck. 5G is more concrete than digital currency, but it has not found a breakthrough business scenario this year. Therefore, the application scenarios of digital currency cannot be calculated with fingers.

After all, we still view digital currency within the conceptual framework of legal tender and third-party electronic payment. Our imagination is always limited. Perhaps the next generation will have a better solution than us.

Like the blind men touching an elephant, at least we have not closed ourselves off and are still trying to find the boundaries of the unknown.