Digital currency promotes financial innovation, and which areas will benefit?

Summary

Event: As the central bank's digital currency gradually approached and the market's attention continued to heat up, the central bank's "Mr. Changchun's "Technology Finance Frontier: Libra and Digital Currency Outlook" public class made a deeper understanding of digital currency. Interpretation and outlook; China continues to maintain its leading position in the field of digital currency, and related research and development and service companies and institutions are expected to benefit.

China's planned central bank digital currency will promote financial innovation, focusing on M0 substitution in the current situation of leading online payment. At this stage, the central bank's digital currency design focuses on M0 replacement instead of M1/M2 replacement. This is because M1/M2 has now been electronically and digitally implemented. Because it is based on the existing commercial bank account system, there is no need to digitize it with digital currency. In addition, various types of online payment mechanisms that support M1 and M2 circulation interbank payment institutions are increasingly efficient and can meet the needs of China's economic development. In contrast, existing M0 (banknotes and coins) are easy to be forged anonymously, and there are risks for money laundering, terrorist financing, and the like.

The central bank's digital currency research and development is leading, and five types of enterprises and institutions may benefit from digital currency. Since 2014, the central bank has been active in digital currency research and development, including setting up a specialized digital currency research institute and actively applying for related patents. As of August 4, 2019, the Central Bank Digital Money Research Institute applied for a total of digital currency. 74 patents; determine the pilot application scenario of using the digital ticket trading platform as a legal digital currency, and complete related tests and trial runs. We believe that at least the following institutions may benefit from the research and development of digital currency: (1) market institutions that develop digital currencies along with the central bank's digital currency research institute; and (2) financial development of financial innovation products based on digital currencies to reduce corporate financing costs. Service organization; (3) Big data analysis organization; (4) Identity certification service organization; (5) Wallet service provider, technical service provider, identity and transaction registration service provider with experience in retail payment business in the blockchain industry.

Throughout the world, it is clear that China and the United States have played a leading role in the historical process of digital currency, and digital currency will affect the future global financial and economic landscape – or it can be said that China and the United States will continue to use the power of digital currency. Affect the world economic structure. Innovation and opportunities come, competition and challenges coexist, and the world is embracing the digital currency era!

Risk warning: regulatory policy uncertainty, project technology progress and application landings are not as expected, and cryptocurrency-related risk events occur.

1. Hot Spot Tracking: Which areas will benefit from digital currency to promote financial innovation in China?

Event: As the central bank's digital currency gradually approached and the market's attention continued to heat up, the central bank's "Mr. Changchun's "Technology Finance Frontier: Libra and Digital Currency Outlook" public class made a deeper understanding of digital currency. Interpretation and outlook; China continues to maintain its leading position in the field of digital currency, and related research and development and service companies and institutions are expected to benefit.

China's planned central bank digital currency will promote financial innovation, focusing on M0 substitution in the current situation of leading online payment.

At this stage, the central bank's digital currency design focuses on M0 replacement instead of M1/M2 replacement. This is because M1/M2 has now been electronically and digitally implemented. Because it is based on the existing commercial bank account system, there is no need to digitize it with digital currency. In addition, various types of online payment mechanisms that support M1 and M2 circulation interbank payment institutions are increasingly efficient and can meet the needs of China's economic development. In contrast, existing M0 (banknotes and coins) are easy to be forged anonymously, and there are risks for money laundering, terrorist financing, and the like. In addition, electronic payment tools, such as bank cards and Internet payments, are based on the existing tight coupling model of bank accounts, and the public's demand for anonymous payments cannot be fully met. Therefore, electronic payment tools cannot replace M0. Especially in areas where account services and communication networks are poorly covered, people's dependence on cash is still relatively high. Therefore, the design of China's central bank DC/EP maintains the attributes and main features of cash, and also meets the requirements of portability and anonymity. It is a better tool to replace cash.

The central bank's digital currency research and development is leading, and five types of enterprises and institutions may benefit from digital currency. Since 2014, the central bank has been active in digital currency research and development, including setting up a specialized digital currency research institute and actively applying for related patents. As of August 4, 2019, the Central Bank Digital Money Research Institute applied for a total of digital currency. 74 patents; determine the pilot application scenario of using the digital ticket trading platform as a legal digital currency, and complete related tests and trial runs. China's central bank continues to lead the way in the research and development of digital currency. China's central bank digital currency may adopt the "one currency, two banks and three centers" structure; the blockchain is expected to be applied to establish a centralized/distributed bookkeeping registration center for the generation, circulation, inventory check and demise of China's legal digital currency. . We believe that at least the following institutions may benefit from the research and development of digital currency: (1) market institutions that develop digital currencies along with the central bank's digital currency research institute; and (2) financial development of financial innovation products based on digital currencies to reduce corporate financing costs. Service organization; (3) Big data analysis organization; (4) Identity certification service organization; (5) Wallet service provider, technical service provider, identity and transaction registration service provider with experience in retail payment business in the blockchain industry.

China's digital currency has begun closed-loop testing, and Shenzhen has become a core city for digital currency research and applied experiments. In connection with the "Opinions of the CPC Central Committee and the State Council on Supporting the Construction of the Pioneering Zone for Socialism with Chinese Characteristics" (referred to as "Opinions") issued in August, people have got more clear information, Shenzhen from the "Special Zone" to the "Demonstration Zone", the country The policy gives digital currency the opportunity to land for the first time, and Shenzhen will become a technology research and development center in the field of digital currency. In the 5G era, digital currency innovation will bring huge development opportunities and market space.

Throughout the world, it is clear that China and the United States have played a leading role in the historical process of digital currency, and digital currency will affect the future global financial and economic landscape – or it can be said that China and the United States will continue to use the power of digital currency. Affect the world economic structure. Innovation and opportunities come, competition and challenges coexist, and the world is embracing the digital currency era!

2. Government-related news: Uruguay approves a bill regulating the crowdfunding platform, which can be applied to some ICOs

Uruguay has approved a bill to regulate crowdfunding platforms that can be applied to some ICOs. On September 11, the Uruguayan government approved a bill to promote entrepreneurship. Article 50 of the bill will regulate collective financing or crowdfunding platforms and can be applied to some ICOs. Attorney Paula Rodríguez Medalla added: “There is no doubt that this rule provides a new legal framework for some ICOs that are committed to collective financing, so it is important to pay close attention to the regulations promulgated by the Central Bank of Uruguay on this issue.” State Council: Relying on Blocks New technologies such as chains drive regulatory innovation. On September 12, the State Council issued guidance on strengthening and standardizing post-event supervision. The opinion puts forward to give full play to the role of modern science and technology in post-event supervision, relying on new technologies such as the Internet, big data, Internet of Things, cloud computing, artificial intelligence, blockchain to promote regulatory innovation, and strive to maximize regulatory effectiveness. Supervised cost optimization and minimal disruption to market players.

3. Industry chain related dynamics: BTC miners' revenue increased by 7.2% from the previous month

(The following source website data was updated to September 14) Last week, BTC added 2.23 million new transactions, down 4.8% from the previous month; ETH added 4.8 million new transactions, down 6.3% from the previous month.

Last week, the average daily income of BTC miners was US$21.43 million, an increase of 7.2% from the previous month. The average daily income of ETH miners was US$2.62 million, an increase of 5.6% from the previous month.

Last week, the average daily computing power of BTC reached 90.5EH/s, an increase of 11.1% from the previous month; the average daily computing power of ETH network reached 181TH/s, an increase of 2% from the previous month.

Last week, the difficulty of mining the whole network of BTC was 11.89T, an increase of 1.8% from the previous month; the next difficulty adjustment date was on September 27th, the expected difficulty value was 13.19T, and the difficulty increased by 10.92%; the average mining difficulty of ETH whole network last week was 2.29T, an increase of 2.3% from the previous month.

risk warning

1. Regulatory policy uncertainty;

2. The technical progress and application of the project fell below expectations;

3. Encryption currency related risk events occur.

Source: Guosheng Blockchain