The Problem of National Digital Currencies. Who Needs It?

Cryptocurrency and blockchain technologies are advancing at an incredible rate, and we are seeing more and more ways to put them to work every day. One of the most important industries into which this innovative technology has penetrated is the field of iGaming, also known as gambling.

For example, many online casinos, at PlayAmo Australia, and similar institutions can already pay and withdraw money in cryptocurrency — this allows players to avoid waiting several days for international transfers and paying commissions to banks.

But this is no longer a new trend, now they are trying to bring the use of cryptocurrency to a new level, national and global.

In recent years, the number of states whose authorities are studying the introduction of digital national currencies has increased significantly. It seems that China is still ahead of the rest of the world in this matter. Several provinces there have been testing the digital yuan (e-CNY) for the second year in practice. But there are already a lot of questions. However, many experts, in general, do not classify the digital yuan as a cryptocurrency because of the existence of a single issuing center.

Problems of Decentralization

The main advantage of cryptocurrencies over fiat money is decentralization and, as a consequence, the absence of an issuing center. The state can print as much money as it wants, the decisions are made in narrow financial circles and are usually approved by legislators. Of course, the printing press working around the clock can eventually lead to inflation, but the fact remains that nowadays the management of money is in the hands of the state.

And it is impossible to imagine that the state would voluntarily give up this function, as we can see in the example of China.

E-CNY is issued by the Celestial Central Bank. Many users who took part in the test did not see much difference between electronic money payments and digital transfers of the new currency.

Difficulties of Transfer and Security Issues

National digital currencies have some obvious advantages:

low cost of producing money

no intermediaries for the transactions

high security against forgery

When transferring money using electronic systems all of us use the services of intermediaries, be it a bank or an electronic purse. We are charged a certain commission, and often it is not noticeable, but for large transfers is very significant. And in cryptocurrency systems, you can pay only a few bucks for a transaction of the equivalent of tens of millions of dollars.

With the introduction of the national digital currency, the need for intermediaries will disappear, which can cause a serious blow to the financial system of any country.

Another important issue is user security. Using the example of the digital yuan, it becomes clear that the authorities can record all transactions, if necessary to block the wallet, etc. Of course, even now in many countries, at the request of authorized bodies, financial and credit institutions provide the required information. However, this fact is used by swindlers as well, leaking the bases into the network. The states, with varying success, are fighting this phenomenon.

Some experts say that full control over the finances of every user of the state's digital currency is no threat to the good citizen. Maybe so, but there is no guarantee that all the controllers of the system will be good.

Who Else Is Going to Switch to Digital Currency?

Almost all countries, both developing and developed. Sometimes it seems like an aggressive race has begun, and whoever is the first to effectively implement digital currency in their financial system will take the cream off the table.

However, no one is in a hurry to follow El Salvador's example, but they are watching closely. Cryptocurrency payments have been allowed in various countries for several years but in certain sectors of the economy.

For example, in Switzerland, decentralized cryptocurrencies are regulated by the same rules as foreign fiat currencies.

But China has launched a serious fight against mining and the cryptocurrency market in general. It is hard to say where this will lead, but it is unlikely to contribute to progress.

In the former Soviet Union, too, everything is different. The Baltic countries and Ukraine are on the way to legalization. Kazakhstan has legalized mining and some operations with digital assets. And in Russia, more and more bans are being introduced, but talk about the digital ruble continues.

Right now, hardly any experts in the world can accurately predict future developments with digital assets.

States with democratic systems will have to somehow «cross» a single issuing center and decentralized platforms.

Whether it will work is a big question! Well, in states where governance systems are similar to China's — this problem will probably be solved simply — the introduction of e-CNY shows exactly how.