As everyone is worried, digital currency will indeed have a series of extremely important influences on all aspects of the financial market structure and the direction of economic development, especially for the popular digital currency, which has a unique form of embedded decentralized payment mechanism based on the use of distributed ledger. The impact covers a wide range, which directly includes the potential damage to the business model and system in the industry at this stage, and also really promotes the formation and development of the new economic situation to a certain extent. There are many innovations related to digital currency's keeping pace with the times, including some new innovations in assets. Money is issued automatically, and all parties do not bear any responsibility. There are also some new breakthroughs in payment. This distributed ledger was finally allowed to be transmitted point-to-point, even though it did not involve a trusted third party.
This form of innovation has greatly promoted some forms and methods of retail payment transactions, including e-commerce, cross-border transactions and personal payment. And there is a bigger advantage, that is, their corresponding end users can enjoy the advantage of being faster and cheaper. However, there are also some problems, such as the efficiency of the payment system may also have a certain impact, and potential risks in some industries will also arise. For the long-term development, competition and cooperation on the Internet will be more closely linked and will ferment new advantages. Therefore, the development of digital currency will indeed have a great impact on the payment system.
The value of digital currency is far-reaching, but different from the traditional electronic currency, digital currency relies more on the exchange of goods or services at time nodes, even a certain amount of sovereign currency. However, the management of this trading system is usually determined by the protocol set by the background computer.
For digital currency, through different payment methods, its own value will be transferred from the payer to the payee. As mentioned earlier, digital currency takes the distributed ledger as its most critical innovation form, which provides people with the ability to exchange electronic value remotely without trust, that is, in the traditional sense, we can transfer money or buy and sell goods without intermediaries and mutual trust. For your own payment account, there will also be effective security protection measures, including face recognition system to verify your true identity, and will also set access passwords based on security considerations. Users or payers must use their own accounts for legal transactions.
Digital currency's institutional arrangements also have new schemes and forms. For digital currency, there are usually many organizations operating behind the scenes, and they can also provide convenient and humanized services such as wallets.
The People's Bank of China is the central bank of the country, which itself contains the legal responsibility of our society to provide payment and settlement. At present, China's central bank provides unified clearing services for social transactions and traded materials in China based on China's modern payment system. Thus, China's central bank is the core hub of China's payment system, but digital currency has just broken this balance, and digital currency has gone beyond the unified settlement and payment system. If it is promoted on a large scale, the Bank of China will be greatly challenged. Coupled with digital currency's own characteristics, people can't grasp the transaction information in time, so they will lose a lot of behaviors on the edge of the law, which also brings some problems and challenges to the supervision system.
For China's commercial banks, it will be greatly challenged by the promotion of digital currency. Payment service is one of the most basic functions of commercial banks, and it will also be greatly challenged by the promotion in digital currency. Commercial banks in China will also be greatly reduced due to the promotion of digital currency. At present, commercial banks are still the core and important entrance of the whole social payment market and play an irreplaceable role in the payment system. When vigorously promoting digital currency, the public will bypass commercial banks as the key payment hub, and digital currency will play the role of disintermediation, seriously weakening the payment function of commercial banks and reducing their own income. In addition, the deposit business of commercial banks will also be greatly challenged and threatened.
As one of the projects with a long history, deposit is also the survival foundation of commercial banks. As far as the modern financial system is concerned, the deposit business plays an irreplaceable role. Because of the particularity of digital currency, the holders of digital currency no longer deposit their money in the bank, but become ready-to-use cash that can be kept and held at any time, which not only satisfies the freedom of payment, but also has a certain form of deposit.
In order to ensure the status of the central bank and the basic living environment of other banks, and to grasp the control and initiative of digital currency, the central bank must also take the initiative to intervene and control the research of digital currency, which is suitable for China's national conditions, so as to truly facilitate the people and innovate industries. Establish a monetary payment and business system different from the traditional one, and promote a new payment system based on digital currency. Through our own efforts, we should minimize the large-scale issuance of digital currency outside the control of the state, and the adverse impact and impact on the public and the national payment system after the issuance, and ultimately maintain the central bank's core position in the current payment environment. With the core resources and talents in national commercial banks and the advanced technology at present, China has accumulated certain experience and foundation in finance, so it is necessary to strengthen cooperation among banks and issue a unified digital currency suitable for the current national conditions.
Digital currency in the form of books is indeed a revolutionary field and a new development direction of the real rise of the payment field. The emergence of a new direction will certainly promote the development and innovation of the whole industry in all aspects, and will also stimulate the traditional payment methods, thus driving the new overall innovation and development of the whole field. The progress of science and technology is the premise and key of all innovation, which also promotes the innovation and change of payment services with the change of mainstream, and the demand of these services has greatly increased because of the chain effect, and the overall supply chain has also had new influences and changes.
Today's records and account books have changed from traditional paper records to electronic forms, and have been preserved for a long time, and the whole system has been transformed. This kind of progress and change has improved the speed and reliability of the transaction, and finally reduced the risks brought by the transaction itself. Today's technology is enough to support the cost reduction of payment technology. Through low-cost payment technology, it provides a prerequisite for the emergence of new payment plans, such as the current mobile money plan. In recent years, various new challenges and innovations to traditional payment technology have appeared frequently, and various platforms that try to replace traditional trading methods have emerged one after another. Some platforms focus on innovation and provide some special services based on these users, so they will not leave the central entity with high credibility.
The innovation of modern payment technology mainly focuses on four aspects, including mobile payment technology, integral technology and system division, as well as regional currency management and application, and finally the overall service and connection of financial framework. Theoretically, the digital currency Plan should include a new decentralized payment system and a new currency. All plans should have publicly visible ledgers for storage and use, and can be retrieved when necessary. The key feature of every digital currency project should be that users have the right and ability to make effective changes to these ledgers, and this process should be allowed.
Due to the particularity of online transactions, most currencies will be encrypted when trading, which is also commonly known as cryptocurrency. They realized effective cognition through the corresponding encryption method, which provided a guarantee for our transaction. Although we have introduced new technologies and trading systems, our original basic payment structure has not changed.
For payment, our core still lies in the central ledger, which should be centralized and should not divide the challenges. Unified settlement under the management of a central organization will be safer and more reliable, and it is also a traditional structure and process. Based on the clearing bank, there will be a certain degree of responsibility and guarantee. For example, the central bank of our country is a vivid example, and it is also the most important hub for our payment.
As a participant in each payment, generally speaking, it is mainly commercial financial institutions that cooperate with the central bank to record and check the account books behind the scenes, and this record is also reflected in the bank's own internal account books, so having double protection is a more important guarantee for the security of the payment system. For individual users, some scattered subsidiaries and even some smaller branches, their transaction processes will be recorded and saved in the form of ledgers.
The cryptocurrency in the new plan and the new balance in digital currency, and then the new decentralized payment system and new currency come out. The overall innovation of this industry is similar to the emergence of early money and payment systems to some extent. At the beginning, their creation was not controlled by the central bank, which also caused many social problems and payment problems, which also involved security issues. Therefore, we should have a deeper reflection and better handle the results.
The core issues of economy and finance always revolve around money and payment, and many new industries have developed around this. In a short period of time, the policy issues issued by the central bank may have an impact on our payment system and the corresponding supporting industries.
If this mode of payment and operation in digital currency can be widely used, even a large number of capital transactions or transfers, as well as the transfer of funds by some enterprises or individuals to different countries and the total amount of funds calculated based on the exchange rate, it will also have a great impact on the national central bank and the corresponding responsible institutions and fields. For example, when you pay, it will involve the supervision and audit of the payment system and the corresponding institutions and institutional supervision departments. In addition, the overall financial stability and the monetary policy based on the national conditions may have a more prominent and obvious impact on the payment system.
Digital currency's biggest breakthrough is to allow the use of decentralized payment system for payment and equivalent exchange. Bank deposits are accompanied by digital records, and as a bank itself, it is deeply trusted by people, and its own data is also effective. Compared with monetary payment, such data may be copied many times, and the retention time will be greatly reduced. Because of this, digital currency's own data can be used publicly without trusting the value exchange. Therefore, we also need to require the corresponding users and groups to trust the resulting special institutions to a certain extent, and establish reliable payment rules under the network environment.