Digital cryptocurrency

Jul 21, 2021 By Si Gyeongmin

The CGAP of the World Bank compares the differences between electronic currency and digital cryptocurrency from the aspects of form, several units, customer identification, issuer, and issuance mechanism.

Cryptocurrencies can generally be divided into two categories: (1) Central Bank Digital Currency (CBDC); (2) private or civilian digital currency. Among them, private cryptocurrencies represented by Bitcoin and Ethereum mainly have the following characteristics:

(1) Low transaction costs. Compared with traditional bank transfers and remittances, digital currency transactions do not require payment to third parties, so they are suitable for cross-border payments;

(2) Fast transaction speed. Digital currency is not issued by any centralized institution, nor does it require any similar clearing center to process data, so the transaction processing speed is faster;

(3) A high degree of anonymity. Both sides of the transaction can complete the transaction in a completely unfamiliar situation, so they have higher anonymity.

(4) The amount of currency is fixed. For example, the total amount of Bitcoin is 21 million, so the risk of inflation is eliminated to a certain extent. However, because of its unstable value, it is difficult to use private digital currency for pricing or value storage, and its circulation range is limited. Therefore, it does not have the basic functions of currency as a value measure, circulation means, storage means, payment means and so on, hence, it does not belong to the real sense of currency.

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