Pandora's Box Concerned about Digital Currency——Preface to Digital Currency: Inheritance and Innovation from Slate Economy to Digital Economy

Editor's note: This article is the preface of Wang Wei for "Digital Currency: Inheritance and Innovation from Slate Economy to Digital Economy".

History is a forest, always showing different landscapes. In the sun, in the rain, after spring, summer, autumn, winter or the rebirth of wildfire, it will always be there, showing off itself, and hiding various secrets. Moreover, every observer entering the forest, from a different entrance, with a different state of mind and purpose, will have a completely different feeling with different partners. This is the charm of history. There are too many unscrupulous scholars and figures who confidently make countless conclusions and announce the truth of history, but they instantly become abandoned history. Therefore, to maintain a minimum of awe and humility is to dare to evaluate the moral bottom line of historical figures. The history of finance is even more so. The driving and nourishing of finance and human needs and desires are strongly bound to each other, making it the most hidden and torn link in the history of civilization. And feel relieved.

In the last ten years, the subprime mortgage crisis, Bitcoin and Libra have become a new high ground for re-observing financial history, and they have also become a touchstone for checking financial theories and policies. The Internet and big data are rapidly occupying and replacing the entire ecological environment of the current human civilization. More importantly, it has overturned and changed the social foundation that has been formed over thousands of years. When we are still struggling to understand the daily technical and commercial shockwaves, we must clearly understand that the basic cognitive system and analytical logic and tools we use to grow and grasp reality are rapidly disintegrating. While advocating theoretical innovation, it is necessary to accept the bankruptcy of mainstream theories. This is a painful and unacceptable process for the classical school accustomed to tinkering and trying to be self-explanatory, but the new generation does not have this psychological obstacle.

Dr. Long Baitao is such a new financial man, or a layman of mainstream finance, a savage. I noticed that he was at a Libra seminar where my old friend Zhu Jiaming asked me to attend. The proposed scale of Libracoin by Facebook was born, which shocked the global financial circle. The US Federal Reserve and the European Central Bank quickly made repressive gestures, thinking that it was a business circle technique that interfered with fiat currencies, and then tried to recruit security to regain the inclusive financial ethics heights that had been lost. For several months, there were no corresponding rules. China on the other side of the ocean highlights the rare landscape. The central bank's high-rise building officially launched the digital currency banner, which does not rule out cooperation with the people. Non-governmental scholars have come up with various technical solutions and theoretical designs, competing with foreign counterparts. Dr. Long Baitao's speech and thesis have unique interpretations of the token economy, global currency competition, and the implementation of China's digital currency. In particular, it is impressive that many of the foundations of traditional financial theories and policies, such as the origin of currency, are impressive.

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It is an old saying that money originates from transactions. It seems that the same line from Adam Smith to Marx has been concluded in China. But in the eyes of contemporary scholars, this is an imaginative assertion that cannot be proven but can easily be falsified. Early human history has never been followed by so-called rationality and civilization, and violence and power are the real driving forces. Even now, civilization, rule of law, and rules are very fragile appearances, which can be easily broken by the butterfly effect and the black swan. Money originates from authority and is based on politics. This is a living history and reality, and has nothing to do with conspiracy theory. The origin model of currency based on transactions dominates mainstream economics, monetary science and policy science, allowing mathematical models that deliberately exclude a series of realistic constraints to be beautifully displayed in business school topics and textbooks, which also led to the long-term capital controlled by Nobel laureates. We still remember the malignant canceration of corporate and subprime loan portfolios. The theory of the origin of money based on empowerment was abandoned, thus making "currency neutral" and "currency veil" the norm, giving the central bank and mathematical scientists more room to explain and regulate the market. The genie of currency was castrated artificially, and it seemed that it was eventually tamed by human reason.

And slow. Lydia's lion coin, sword cloth coin of the Spring and Autumn Period and Warring States period, Jiaozi and Huizi of the Song Dynasty, France refers to the coupon, the United States green back, the Mexican Eagle Ocean, the Republic of China head. . . All these so-called payment instruments, in addition to the described value scale and collection methods, also bring huge additional energy. Inflation is just a big currency statement. Business cycles, market collapses and the rise and fall of regimes often use finance. Interpretation of factors outside. We are too used to thinking that finance and money are just tools, and the energy of money is greatly underestimated.

Under the environment of the Internet, big data, blockchain and artificial intelligence, the era of digital currency has suddenly started, giving us a new perspective. Bitcoin's peer-to-peer (P2P) transaction is the basic function of the blockchain. Algorithm technology has become a so-called human rational competitor. Digital currencies may release too much energy like Pandora's box. We may not be able to predict or understand this. This is new. The charm of money and finance. For mainstream scholars who have achieved success, people like Long Baitao are too cluttered, laypersonal, aggressive, and even dismissive. They are also immersed in the cognitive level in the era of schooling decades ago. They no longer pay attention to the new currency concepts on the latest online media. They enjoy self-reinforcing authority in classrooms, televisions and forums, and cherish their feathers.

I also come from a financial background and have been involved in the financial market for many years. Since the founding of the China Financial Museum, I deeply believe that all previous financial cognitions have been almost completely eliminated and it is necessary to relearn and understand. Fortunately, I met a group of young people, wrote many forewords for the earliest Bitcoin and blockchain in China, and had a first-hand experience. Long Baitao deserves me and hopes that I can write a preface. This is a spur on me who is about to fall behind. I wish more young scholars pay attention to currency and finance and participate in remaking financial theory. I also pay special tribute to Zhu Jiaming, who also wrote the preface. He was famous in the academic circle when he was young. He later studied the history of monetary thought and left a huge book that is enough to enter history. He is now in the digital asset field.

Wang Wei

Chairman of China Financial Museum

2019.11.28

About Books

"Digital Currency: Inheritance and Innovation from Slate Economy to Digital Economy" will be published by Oriental Press after the Spring Festival of 2020. This book is part of the Digital Assets Research Institute's Digital Economy and Technology Series. It was written by Dr. Long Baitao, Executive Deputy Director of the Academic and Technical Committee of the Digital Assets Research Institute. The chairman Yi Xiqun and the director of China Finance Museum Wang Wei jointly recommended that Zhu Jiaming's preface has been revised ten times. After writing for half a year, the book has a total of more than 290,000 words, and its publication in a small area has caused strong response.

The book aims to use monetary and financial theories and institutions to examine the various financial phenomena of the digital economy, and attempts to answer the following questions: First, the debate about the origin of money. Secondly, the principles of the operation of the modern monetary and financial system, namely the creation, supply and circulation of money, the operating mechanisms of commercial banks and central banks, etc. Third, the system and order of the current monetary and financial system. Fourth, how to understand the financial nature of various digital financial phenomena? Fifth, which forces are shaping the status quo and future structure of the monetary and financial system? Sixth, how to understand CBDC? Seventh, how to understand the global stablecoin represented by Libra?

The content of this book is mainly divided into five parts. The first part is about the origin of money and the current status of the monetary and financial system. Here we establish a basic consensus for readers to understand all the issues related to monetary and financial theory related to digital currencies. The second part focuses on examining the financial phenomena in the digital currency field from the perspective of monetary and financial theory, such as token finance, stable currency issuance mechanism, and inclusive finance (referring to the monetary and financial system of democracy, fairness, financial stability, and sustainable development) , The nature of currency banking in crypto asset exchanges, changes in the currency competition paradigm in the digital age, and the reshaping of future monetary and financial systems. The third part discusses the origin, design principles and typical design schemes of the CBDC from the perspective of monetary and financial principles, and discusses the origin of the CBDC, the design principles and typical design schemes, and the impact on public policy. Its influence on financial stability and possible countermeasures are analyzed. The fourth part is about the risks and challenges of Libra and global stablecoin. Part V is very distinctive and contains 19 articles on topics such as crypto assets, stablecoins, central bank digital currencies, payments, financial inclusion, financial sovereignty, etc. Speech and author's comment.

The contents of this book are as follows:

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