Good morning, Central Bank

I was drinking in a foreigner's company and heard people talking about Q on the Internet. Suddenly, one person shouted "rise", and then hundreds of thousands of people shouted. There were strong pulls in the middle, short positions burst, and joyful laughter. Hundreds of thousands of people did everything they should. All the currency people were panicked and changed color. They raised their sleeves and arms, their legs trembled, and they trampled on each other. There were countless people who bought the rise. The foreigner was also surprised. He turned to the currency to explore and saw only one post in the forum. He opened the post and saw only one person, one word, one theory, one point of view, and one article.
————Adapted from "Voice Imitation"

After talking about classical Chinese, what exactly caused people to panic? It turned out that the central bank said: The People's Bank of China Digital Currency Seminar was held in Beijing on the 20th. The meeting believed that under the current new normal of China's economy, exploring the issuance of digital currency by the central bank has positive practical significance and far-reaching historical significance. It also said that the digital currency research team of the People's Bank of China will actively absorb the important results and practical experience of digital currency research at home and abroad, and strive to launch the digital currency issued by the central bank as soon as possible.

The stranger could only smile and touch his chin, silently reciting a famous saying in the cryptocurrency circle: I have read the document, it is true.

It is not accidental that this incident caused a stir in the currency circle. I have written articles before saying that policies have a great impact on currency prices, otherwise the "Five Ministries and Commissions" would not have caused the currency price to plummet from 7,000 to 2,000 like mercury.

However, "the central bank convened a digital currency research meeting and intends to issue digital currency" was obviously interpreted as a positive factor, and of course the currency price rose accordingly.

Is the truth really as people think? Here, I will make a simple analysis. Whether it is right or not is not discussed for the time being, just for fun.

1. What is the intention?

People always wishfully believe that the government and the central bank will do this for their own good...Facts keep slapping them in the face, but don’t be afraid even if your face gets swollen, just continue to "believe" it.

For example, last year, the People's Daily published an article titled "4000 points is the beginning of the A-share bull market" which fooled countless investors into falling into traps. Then, take a look at the article "Why did Star Wars make a sensation in the United States?" in the 1970s, which firmly asserted that "the decay and decline of the entire capitalist culture doomed the American film industry to find no real way out." This habit has not changed for decades. If you still don't believe it, you can look at the famous picture in the media, "Every year is getting harder and harder."

The above is enough to make people laugh, and both public opinion and public opinion think that the policy is stupid enough. However, the government is still able to "resolutely" move forward despite the constant opposition of public opinion. Its determination and action are enough to make people give it a thumbs up.

But I didn't expect that this time they would come to their senses and hold a meeting to study the issuance of digital currency. In the final analysis, they want to catch up with the world trend, tie their own hands and feet and stop printing money indiscriminately, establish a credit mechanism, and make it convenient for the public to use it?

Later, I read the title of the article on the homepage of Sohu.com, "Central Bank: Strive to launch digital currency as soon as possible to reduce crimes such as tax evasion and tax avoidance." It was as if the clouds had been cleared and the sun had been shining. I had to sigh that the editor of Sohu is good at grasping the "essence of the article." The same article was interpreted by the currency circle as "supporting digital currency", but was seen by discerning people as being for the purpose of "facilitating tax collection."

It turns out that the amount is between one thousand and ten thousand, and this is just for "collecting taxes"!

Since ancient times, the government has been troubled by how to collect taxes. How to get the sheep to pay the tax without making them cry out in pain has made the government rack their brains. Moreover, the sheep have gradually become smarter and often pluck their own hair and hide it, making it impossible for the tax collectors to find it. It is really "fucked up". Now with digital currency, there is a new way to exploit the sheep. Using digital currency and "ledger-style" accounting is both technological and fashionable, and it can also be "high-end" to keep pace with the world, making tax collection more convenient and more enjoyable!

Imagine that after the central bank issues the currency, the value-added tax and other things will be deducted directly, and no one can escape...

The integrity of the central bank currency will not be directed at itself, but always at the users.

2. Possible means

What form of digital currency might the central bank take when issuing it? POW, POS, or something else?

I think that if you want to know how hard POW is, you have to work hard to mine. If you do pre-mining, you will be cursed by thousands of people. If you don’t do fair competition in pre-mining, do you think the central bank is Lei Feng? Based on the consistent style of the central bank, it is basically locked in the POS form of working without effort.

Therefore, the central bank is the most powerful, and it must have a say in the digital currency it issues, so it must be POS. The central bank currency can be exchanged for different amounts of RMB on hand, and then the central bank can withdraw RMB while issuing digital currency. Anyway, the currency of POS is essentially a pyramid scheme, with people pulling people, and the more coins you hold, the more interest you get. The central bank doesn't even need to print money, and only needs to open the computer client. Isn't this convenient and labor-saving?

As for the upper limit, it is hard to say. It is estimated that several meetings will be held to study it, and finally a shocking amount will be come up with and distributed to the public. According to the routine of Chinese people scrambling for commemorative coins, major banks will promote the "Central Bank Coin" to the public, and then "experts" and "beasts" will come to support it... It can be used for offense or defense. If the promotion is successful, it will mean "China has made outstanding achievements in digital currency"; if it is unsuccessful, it will become an "alternative version of commemorative coin."

Are you asking about the security of the central bank currency? Of course it is safe. Everyone has to go to the bank to apply for "online banking" to hold it. Various transactions must be bound by the most restrictive conditions. Real-name transactions are naturally not a problem, so the central bank currency cannot be lost. And the central bank will definitely set a reserve price very considerately, just like many commemorative coins, and the value is absolutely guaranteed in RMB...

But the problem is...the central bank's currency must be operated in accordance with the interests of the central bank, and it has an inseparable and complicated relationship with the RMB.

Moreover, the central bank currency must follow two principles: first, the decision-making power of the central bank currency must be in the hands of the central bank; second, the central bank currency must serve the central bank.

It is not an exaggeration to call these two principles the "two basic principles".

Therefore, once there is a problem, such as the tendency of the central bank currency to escape the control of the central bank, the central bank will decisively withdraw from the game, declare the first generation of the central bank currency a failure, withdraw from the existing mechanism and launch the second generation of the central bank currency, and if the second generation fails, the third generation, or even the thousandth generation, in short, the power cannot be lost; and the central bank must definitely be able to gain benefits from it, just like the "land transfer fee" is always the lifeblood of the government. How to get the wool is not worth thinking about, anyway, it hurts to think about it.

Possible Outcomes

To sum up, do you think that the central bank currency can be successful?

The foreigner thought it would definitely not succeed.

A successful digital currency must have two qualities: one, decentralization; two, trust protected by mathematical laws.

The central bank's currency will ultimately become just a copycat currency produced unilaterally by the government.

In fact, the central bank's currency is essentially not as good as the copycat coins. Although some copycat coins have various drawbacks, they at least have certain "decentralized" qualities. The central bank's currency has never thought about this at all. It just wants to take advantage of the Internet to continue its money printing plan, and does not want to contribute to "benefit the country and the people."

Who wouldn’t want to take this ride? Not only is the Chinese central bank coveting it, but the old imperialist British “foreign mother” is also actively conducting research, and the small country of Ecuador announced the issuance of digital currency as early as September 2014...

Of course, due to national conditions, the central bank has a strong military force and countless "trusting" people, so the central bank's currency will definitely be very popular in the early stages of promotion. However, as time goes by, it will gradually become the dustbin of history.

Looking back, that period of history is still vivid in my mind. The Kuomintang once forced the people to exchange gold for gold yuan coupons, and then the gold yuan coupons became waste paper, and the people were squeezed dry; the United States once believed in gold, and the gold standard of US dollars brought the United States a strong "US dollar", but when the US gold reserves could not compete with other countries in the world, Nixon decisively cut off the connection between US dollars and gold, and there was no "US dollar" anymore, only the US dollar...

This is the truth that history tells us. Can you expect a country to give up its own interests and practice "trust in mathematical laws"? Bitcoin can hardly be said to be the only destination for digital currency, let alone a centralized national currency that has emerged halfway?

At present, no digital currency has shown any signs of surpassing Bitcoin. Any country's delusion about digital currency will only make the majority of Bitcoin users increase their Bitcoin holdings.

Any national digital currency that experiences a brief period of “success” will only further promote Bitcoin’s prestige among the people.

Just as freedom and democracy never come overnight, authoritarianism and dictatorship never surrender obediently. But the winds of freedom and democracy will continue to blow those seemingly strong barriers, causing cracks to appear, and finally collapse and disappear into ashes.

People's attitude towards digital currency will only become clearer and clearer with wave after wave.

The world is still moving forward, and no one can stop the progress of history. Let us watch digital currency grow its wings and fly high in the wind.

In the end, only the integrity of mathematics can be deeply rooted in the hearts of the people!

Author: ☆☆EVA☆☆ (Lonely Stranger)
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