The digital currency that the central bank is going to issue is not the digital cryptocurrency you imagine. What is it? Please open the article and read it.

This article adopts CC copyright, but if you reprint it, please notify the author. I am Wang Liren, and Brother Ren is me. Brother Ren is a programmer, financial engineer, and computational law practice enthusiast, and the founder of Renmin Huijin.

If you can read to the end, you will find the copyright story between me and CITIC Securities. Maybe you will come and have a look.

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Although I had known for a while that the central bank was discussing issuing digital currency, I was still surprised to see it flooding my friend circles and being discussed enthusiastically in several communities. Moreover, market sentiment reacted in the wrong way. Although in the short term, this was actually bad news for the development of virtual commodities such as Bitcoin[i], its price still fluctuated slightly upwards.

Friends in the group had a heated discussion that the definition of central bank digital currency should actually be digital cryptocurrency (CryptoCurrency), and it was wrong to use Digital Currency; there were also arguments that digital cryptocurrency can be issued without PoW or PoS consensus mechanisms; several authors, including me, turned out articles related to the central bank's issuance of digital cryptocurrency to prove their correctness, which of course also proved its foresight. When I told the overseas programmers, they just woke up and said that the Pacific Ocean was also in an uproar... It was a really lively night. This is enough to prove the influence of our central bank and China!

Let’s calm down and read the content of the press release [ii]: “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. Issuing digital currency can reduce the high cost of issuing and circulating traditional paper currency, improve the convenience and transparency of economic transaction activities, reduce illegal and criminal activities such as money laundering and tax evasion, enhance the central bank’s control over money supply and circulation, better support economic and social development, and help achieve inclusive finance. In the future, the establishment of a digital currency issuance and circulation system will also help China build a new financial infrastructure, further improve China’s payment system, improve payment and clearing efficiency, and promote economic quality, efficiency and upgrading.”

Can you see any clues?

       The digital currency that the central bank is going to issue is not the digital cryptocurrency you imagine. What is it? It will be a transaction medium, accounting unit, and means of storing value to promote economic growth. It will promote the interconnection of all things, Internet+ and Made in China 2025 .

Economists define money (or money supply) as something that is generally accepted in payment for products and services and debt repayment. The central bank issues digital cryptocurrency not only for the purpose of issuing digital currency, but also to perform the clearly described duties given by Article 3 of the Law of the People's Bank of China: The goal of monetary policy is to maintain the stability of the currency value and thereby promote economic growth. Economic growth has always been the purpose of any monetary policy.

Seeing this news, I think China's commercial banks must be alert. It has been discussed many times before that due to the traceability and programmability of digital cryptocurrencies generated by blockchain, the characteristics of activation and use according to smart contract conditions, and the characteristics of privacy protection, a large account book across the entire network has greatly enhanced the central bank's control over money supply and money circulation, and will make traditional monetary policy tools such as "helicopter money" produce laser precision guidance effects. As a channel role, the deposit, loan, and exchange business scenarios of traditional commercial banks will inevitably decline. This has disintermediated commercial banks, and their fate of being completely disintermediated has already appeared in front of them. If there is a large account book across the entire network, the bank's account management function will be deconstructed, and the value of commercial banks' wealth management and asset management will also decline rapidly. It should be noted that new Internet companies have fully entered the traditional territory and are closely catching up. The two types of "deposit and loan" businesses have been deconstructed a lot. If the central bank makes a decision to apply digital cryptocurrencies on a large scale, it means that the "exchange" business scenario has also been deconstructed. In order to save yourself, you must invest a large amount of budget as soon as possible, give the company's R&D personnel more development funds, and transform as quickly as possible to the role of information intermediary in the era of individual big data. The sooner you act, the sooner you may gain the upper hand in the market game. If you don't transform, you will die. If you transform, you will die but you may still survive. Obtain the data authorization of each individual and become the broker of each individual's big data. Just like the management of capital information representing individuals has been handy in the past few hundred years, managing the huge amount of big data of each individual should also be what commercial banks are good at. Commercial banks have allies, do they want to form an alliance?

Seeing this news, I think that enterprises engaged in industry should be happy. The core value of blockchain is to label data and information in the bit world and determine the unalterable ownership in the era of the Internet of Everything, so as to form a rock-solid property rights system in the Internet space, and combine it with the redefinition of the property rights of all things in the existing physical world. As a result, human society will thoroughly and comprehensively enter the digital Internet society, and it will be a safe Internet society. After the agricultural revolution, human beings, due to settlement and surplus, led to the birth of the property rights system. In order to overcome the defects of the human brain in the use of numbers, the innovation of financial technology (FinTech) in registration, recording, and querying accounts has been the core point of human innovation for 6,000 years. From clay balls with different material properties and technical properties, scarce gold, knotted ropes, notched wooden sticks, anti-counterfeiting paper, to the latest innovative blockchain technology, they all stem from how to prove the authenticity of rights and avoid forgery. The purpose of the development of these financial technologies is to record asset contracts. If the central bank issues a transaction medium based on blockchain, more wealth will be reflected in digital form. With the emergence of an environment that supports the Internet of Everything, this means that asset securitization in a broader sense has begun to appear. The connotation of asset securitization, as well as the further enrichment of the scope of underlying assets of asset securitization, all information on the blockchain Internet needs to be priced, traded and circulated. Blockchain technology has three basic needs for financial development: ① the transfer of value across time and space, ② the right to contract and execute on future results (with risks during the period), and ③ transferability in the financial market. Blockchain has reached a perfect level in meeting these three needs, which means that with the era of self-media, the era of self-finance is also likely to appear. Self-finance means that the information generated by everyone's wearables is valuable, and it is also necessary to pay for the information obtained from the outside, just like driverless cars. With the support of a large amount of accurate information data, a large number of driverless cars can really go on the road. What does this new economic form mean? There are too many things to think about.

Seeing this news, we can guess that the digital currency based on blockchain is like a voucher for everything, pricing each object. Each item will have its own label, and payment and accounting will be made for each transaction. As the report just released by the British government said, [iii] "In short, distributed ledger technology can provide a framework for government, reduce fraud, corruption, errors, and reduce paper costs. It has the potential to redefine the relationship between government and citizens in terms of data sharing, transparency, and trust." and "Distributed ledger technology can help governments collect taxes, issue passports, record land registration, ensure the supply chain of goods, and ensure the integrity of government archives and honest services." Then, the evolution of the entire government management method will become very interesting. The application of vouchers for everything will naturally form some incentives, promote market exchanges, and make the development of finance interesting. IT technology has always promoted financial innovation, and even promoted regulatory measures, and even brought huge compliance costs to practitioners. But no matter what, when digital cryptocurrency is combined with the sharing economy that is born from the removal of information asymmetry, the next Nobel Prize winner may be born here.

So is it necessary to discuss here what technology the central bank will adopt? Whether it is PoW, PoS, nodes, Ethereum, HybraChain, Bitcoin Systems, transaction speed and capacity, these technologies currently have some problems, and humans in the new round of technological explosion cycle can solve them. This article does not focus on this. If you are willing to discuss it, see you in our community.

What exactly will the digital cryptocurrency issued by the central bank be? I guess you guess, and everyone guesses, but looking back at history, we can always see something or two. It will be a currency in the Internet age, a money supply, a medium of exchange that promotes economic growth, a unit of account, and a means of storing value. The future is here, let us realize it together.

Finally, a small story

The research department of CITIC Securities released a blockchain report titled "The Fire of Blockchain: A Single Spark Can Start a Prairie Fire" some time ago. 20 to 30% of the content in the public version contains large excerpts of my words, opinions, and thoughts, but the source and signature are not indicated after using the content. I was advised to indicate the source but they ignored me, which made me very annoyed.

I am just a programmer who promotes the development of blockchain, but even the smallest individuals have their own power and should be respected. The most effective tool for protecting intellectual property rights is blockchain. Do you support me in filing an intellectual property lawsuit against CITIC Securities?