Digital currency, how far is the dream from becoming reality?

Author: Jinrong Guide

Bitcoin is hot

In the past six months , the concept of "blockchain" has become very popular and has been sought after by central banks of various countries. As a result, Bitcoin, which was once forgotten, has become a hot topic in the market in recent days. As of May 30 , the trading price of Bitcoin once soared to $ 600 / Bitcoin, with an increase of nearly 25% in just 4 trading days . This is the largest weekly increase since the bursting of the Bitcoin bubble in November 2013, and also set a new high since July 2014 .

Many traders believe that the surge in Bitcoin is normal. Industry insiders point out that because the Bitcoin market is too small, it is too easy to manipulate the market. Currently, only 15.6 million Bitcoins have been produced in the world, with a total market value of only US$ 8.8 billion, which is only equivalent to the market value of a medium-sized A- share listed company.

In fact, since its birth, Bitcoin has experienced sharp rises and falls. The first wave of Bitcoin's rise lasted from August 2010 to February 12, 2011 , when the price of Bitcoin soared from $ 0.08 to $ 1.09 ; then it fell back to $ 0.71 on April 5 , a drop of 35% . In the following two months , the price of Bitcoin soared from $ 0.71 to $ 35 on June 10 , and then quickly fell to $ 2.29 on November 21 , a 94% drop . However , in the following year or so , Bitcoin rose slowly, and the price rose all the way to $ 237.57 in April 2013 ; then, naturally, there was another wave of plunges, and the price of Bitcoin fell all the way to $ 69.7 on July 6. Then Bitcoin rose sharply again, reaching a high of nearly $ 1,200 on November 30 , and repeated the plunge after the bubble burst, and the lowest price was only $220 at the beginning of 2015 . Since then, Bitcoin has gradually rebounded from its lows. At the end of last year, Bitcoin had soared for seven consecutive weeks, almost doubling from its low point at the beginning of the year, but the good times did not last long. After hitting the $ 500 mark, the crazy rise of Bitcoin fell in an even crazier way, and the price was nearly halved within a week.

Ambiguous regulatory attitude

Bitcoin was born on January 3 , 2009. It is a decentralized, peer-to-peer digital cryptocurrency. In fact, the advantages and disadvantages of Bitcoin are so obvious that it is difficult to judge it with one standard: First , Bitcoin is favored by Internet geeks, and Internet e-commerce companies want to adopt digital currency. In addition, digital currency can also bring economic benefits. Other advantages include not spending money to make banknotes and coins. Digital currency can provide the function of tracking all transactions, just like tracking non-cash transactions. In addition, with the retained transaction history, it is easier to provide corresponding evidence in the event of a dispute.

However, since Bitcoin is not issued by the central bank and is not controlled by regulatory authorities, central banks in many countries have announced that "Bitcoin cannot be used as currency."

In fact, the attitudes of various countries towards digital currency are also quite complicated. The People's Bank of China previously emphasized that the expert group is currently studying the possibility of issuing digital currency, including drawing on the experience of foreign banks in issuing digital currency and China's local use of digital currency.

At a digital currency seminar held by the People's Bank of China in mid-January, Governor Zhou Xiaochuan also revealed that "the central bank actually started studying digital currency a long time ago. With the development of the Internet and the tremendous changes in payment methods around the world, the establishment of a digital currency issuance and circulation system is very necessary for the construction of financial infrastructure and the promotion of economic quality, efficiency and upgrading."

He also emphasized that the central bank must retain control over monetary sovereignty when issuing digital currency. Digital currency is freely convertible and controllable. As legal tender, digital currency must be issued by the central bank. The issuance, circulation and trading of digital currency should follow the idea of ​​integrating traditional currency with digital currency and implement the same management principles.

According to Russian media reports, Livadny, deputy director of the Russian Federal Financial Supervision Service, announced that Russia is planning to create its own cryptocurrency while banning the use of all other cryptocurrencies.

The European Commission said that the EU's current attitude towards virtual currencies is to pay close attention rather than regulate. In addition to dealing with specific risks such as money laundering, there is not much information as a basis for formulating new regulatory rules.

In particular, the news that the Australian government intends to cancel the double taxation of digital currencies has attracted widespread attention around the world. At present, most countries have a vague regulatory attitude towards Bitcoin, and the identity of Bitcoin is also switching between "currency" and "commodity". The move by the Australian government means that governments around the world are becoming more and more open to digital currencies.

In the future, digital currency may be a trend of social development. The issuance of national digital currency based on blockchain technology and controlled by the central bank will affect everyone's ordinary life and provide more efficient technical means for national currency regulation. Of course, in order for currency to truly complete the transformation from reality to virtuality, digital currency also needs to be prepared for financial security.