Thousands of Coins: The Rise of the Stabilizing Coins of the New Currency War

Lead: Since 2019, many institutions around the world have participated in the issuance of stable currency. At the same time, many central banks are actively exploring the issue of digital legal currency. The global financial order is facing tremendous changes. Who is in this “currency war”? Will be the final winner, there are still great variables. Thousands of coins competed, the big waves began to see gold

In 2008, following the publication of “Bitcoin: A Peer-to-Peer E-Cash System”, various private digital currencies based on blockchain technology innovations continued to emerge. As of the beginning of 2019, the global private digital currency category increased by nearly the same period last year. 25%, reaching more than 2,000 species. Digital currency has received a lot of attention on a global scale, and it has become an important international topic, especially in the US market. From the Fed chairman to the president, opinions on digital currency are being published.

However, private digital currencies such as Bitcoin and Ethereum often fluctuate sharply, making it difficult to act as a pricing unit and exchange medium. To meet the liquidity needs, the “stabilized currency” anchoring gold, silver, the US dollar and other currencies and assets has emerged.

The digital stability coin first appeared in July 2014, the TEDA (USDT) issued by Tether, which is formed by Bitfinex, the world's largest cryptocurrency trading platform. Since then, a variety of stable coins have been introduced, such as: TUSD developed by TrustToken, StrongholdUSD jointly launched by IBM and US financial services company Stronghold, Japan's Mitsubishi UFJ Financial Group launched MUFGCoin linked to the yen, and so on.

The most notable events in the digital currency market in the past two years have come from the approval of US official agencies and the digital dollar stable currency introduced by large financial institutions. In September 2018, the New York Financial Services Authority (NYDFS) also approved two digital dollar stable coins issued under the Ethereum ERC20, namely GUSD issued by Gemini and PAX issued by the Principality of Paxos; February 2019, JPMorgan Chase Announced the release of digital currency JPMCoin, which enables instant payment transfer between institutional accounts; in June, Facebook released a white paper announcing the launch of the digital currency libra, which anchors legal currency.

These stable currencies have alleviated the price volatility of private digital currencies to a certain extent, but their issuance has two important preconditions: one is linked to mainstream legal currency, and the other is approved by sovereign state regulators, which also causes its current It is only limited to transactions in the digital currency market, and cannot be widely used in real life scenarios.

At the same time, central banks in many countries around the world have begun to actively explore legal digital currencies. From the beginning of 2016, the Bank of England proposed to issue digital currency, Fedcoin of the Federal Reserve, CAD-coin of Canada, RSCoin of the UK and electronic krona of Sweden. The People's Bank of China is about to launch CBDC.

Obviously, the digital legal currency will have stronger stability. Only by maintaining sufficient stability of the legal currency can guarantee efficient circulation, which is one of the most important duties of most central banks. However, all the stable coins are still being tested in time, only recognized in a small scope, and even a lot of stable coins can not stand the test and are questioned or even eliminated.

The thousand-currency competition is just a prosperous moment. The big waves can only see the last "gold".

At the crossroads, you may not be able to win first.

We are currently at the crossroads where the real world interacts with the digital world. After decades of development, the digital technology with the Internet as the underlying structure has solidified the foundation of the digital world. Over time, this primitive virtual world has produced virtual kingdoms such as Tencent, Alibaba, Facebook, and Amazon. The world has evolved and developed at countless times. The traditional world needs resources accumulated for decades or even hundreds of years. They have done it in just a few years, and the pace of development is accelerating as the infrastructure to support the virtual world becomes more and more perfect.

The digital world, as a new continent that human beings are developing, attracts more and more people to join. Blockchain technology has emerged from this wave of technology. Since its inception, it has had strong digital financial attributes. BTC has built the cornerstone of digital finance in just a decade, and then a large number of digital currencies are emerging, comparable to humans. The development of money from the birth to perfection for thousands of years.

The emergence of stable currency has undoubtedly established a bridge between the digital world and the real world, and completed the definition of the value of the digital world with real-world value scales, which has a larger scope than the previous game tokens. Nowadays, in addition to the mainstream stable currencies such as USDT and TUSD, various trading platforms are also actively launching their own platform coins, and even giant platforms such as Morgan and Facebook. These stable coins are undoubtedly the explorers of digital currency. Leader.

However, as far as the current volume is concerned, the private digital currency trading and circulation scale economy is relatively small, and the market value is only 1/4 of the market value of Apple, which is not enough to have a substantial impact on the financial system and the central bank's monetary policy. And the issue of tokens that can be exchanged with the US dollar (or other legal currency, assets) by certain institutions will inevitably face the centralization risk of the issuer, which is contrary to the original intention of decentralization of digital currency, especially the successive scandals of Tether. It is constantly consuming people's most basic trust in stable coins.

For any kind of currency, a stable credit system is undoubtedly the foundation of its value and circulation. In this case, the digital legal currency endorsed by national credit will undoubtedly have great advantages, although under the current conditions, the global central bank Digital currency has not yet been widely applied, but the digital credit has an inherent credit base, as well as the scope covered by legal currency, and gradually shows advantages in terms of cost, efficiency, and supervision. These can constitute digital legal currency stability. The dimensional reduction of the currency. Therefore, the digital currency may be late, but there is still a great chance of winning the championship on the final track.

Survival of the fittest, seeing the future through the scene

The human currency has experienced physical currency, metal currency, paper money and electronic money. The issuance of stable coins is similar to the metal currency exchange vouchers in the gold standard period. As in 1944, the Brighton Forest system stipulated that the US dollar was linked to gold. Other currencies were linked to the US dollar. The difference was that the issuers were more diverse (not necessarily It is a financial institution), similar to the bank notes issued by the original commercial bank, and the currency form has undergone fundamental changes.

But in the digital world, money will have a stronger network effect, which is a battlefield for survival of the fittest.

First of all, stable currency seems to be widely applicable, but it can only play its role in its own network system. It is difficult to make a difference from its operating system. Stabilizing coins such as GUSD must continuously expand the application scenarios, especially At the same time, even if the stable currency is recognized by the market participants, it is difficult to obtain the support of the monetary authorities of various countries. For example, if China prohibits the digital currency from trading in China, it will naturally prohibit the so-called stability. currency.

Secondly, the stable currency is the issue of tokens in the case of the central bank system and the issue of legal currency. This is contrary to the central bank's majority monopoly of currency distribution rights. This situation is rare in history, such as Hong Kong. The HKMA is a currency bureau system, the right to issue money from commercial banks before 1942, and the special foreign exchange certificates issued by the Bank of China in 1979. If a large number of different types of stable coins are issued, the central bank system will become incomplete. This is hard to accept in any sovereign and complete country.

Finally, in recent years, the United States has frequently used its dominant position to serve its political and diplomatic interests. The wayward financial sanctions are actually US dollar sanctions, which is closely related to the current dominant position of the US dollar in the international monetary system, whether it is the US dollar. Both stable currency and US dollar legal currency will further strengthen the dominant position of the US dollar in the global monetary system and affect the financial sovereignty of various countries. This will be a fierce struggle in the future.

In view of various trends, the technical imperfections of the stable currency itself, the defects inherent in the existence of digital currency in the stable currency, and other practical obstacles have constrained the development of stable currency. The reform of the monetary system may eventually pass the central bank’s legal figures. The form of money is realized, and there will be a fierce digital legal currency game between countries, and major countries are also actively exploring and preparing for the upcoming "currency war", which also indicates the rise of digital legal currency. .

Author: Dipperin Pan Pengfei