Encrypting Money and the Central Bank: Exploring the Non – materialization of Money


nnnRush time comment: Today, the global central banks in charge of their respective notes and coins issued, forming a monopoly trend. However, from the emergence of free dollars in 2007 to 2017 today, the central bank issued the currency and private issuance of encrypted currency has been coexisting for nearly 10 years. In this review, Eugene Etsebeth, a former central bank technical expert at the Reserve Bank of South Africa, outlined what he thought all central banks would eventually try to cancel the material form of notes and coins and what it meant for the central bank.n
nnTranslation: Clovern
nEugene Etsebeth is a former central bank technical expert at the Reserve Bank of South Africa. At the Central Bank of South Africa, he assumed the post of Chairman of the Working Group on Virtual Currency and Distributed Classification.n
nIn this review article, Etsebeth outlines what he thinks all central banks will eventually try to cancel the material form of paper money and coins, and what it means for the central bank.n
nNowadays, the nation-state monopolizes the distribution of notes and coins through decrees and regulations.n
nAnd people only need to revisit the history, you can understand the free dollar (Liberty Dollar) founder Bernard von NotHaus how to try to cast their own private currency and charged with federal crime. US Secret Service and FBI agents in 2007 on the raid of the free dollar office, and confiscated all gold, silver and platinum. And frozen the bank account, seized its computer.n
nThen we fast forward to 2017, the central bank issued the currency and the private issue of encrypted currency has been coexisting for nearly 10 years. Liberals are deeply aware that only the encryption of the currency to the centralization and encryption of the essence of the government agents in order to block the door.n
nAnd there is reason to doubt. Before the arrival of the encrypted currency, the central bank has been vigorously promoting the non-materialization of the currency, it can be said that the technology is encouraging the central bank to try to issue digital money.n
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nnew momentum n
nThe key to this trend is that the coin-to-center encryption currency has given the central bank how to do the currency of non-materialized possible answers.n
nRecently, the Estonian e-Residency executive director has raised a forward-looking question: “Does Estonia begin to issue encrypted tokens to its electronic residents (as well as citizens and residents)?” On the other side, South Africa An official at the Reserve Bank has issued a statement saying that the encrypted currency “is too risky”.n
nThe central bankers are very interested in the range of options and advantages of currency non-materialization.n
nHere are some of the features that are under consideration:n
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nAnd there are some benefits.n
nAt present, the central bank’s cashiers and currency managers around the world are faced with a huge challenge in issuing physical notes and coins.n
nThese challenges include:n
nnCost: Printing a bill based on a polymer or tissue paper is very expensive. Cast coins also need to spend money. This cost affects the central bank’s seigniorage income (the difference between the central bank’s profit from the issue of currency, in particular the denomination of coins and coins and its production costs).n
nCounterfeit money: the development of technology contributed to the criminals forged banknotes and coins behavior.n
nMarket preparation: When new notes and coins are listed, you need to change the vending machine and ticket machine template. Citizens must also learn new features.n
nDistribution: The cost of distributing notes and coins to banks, sub-branches and ATMs is also very expensive and time-consuming.n
nTheft: thugs are usually trying to rob the armored vehicles. ATM opportunities are blown up, banks will also encounter robbery.n
nDestruction: The life cycle of paper money and coins requires that the incomplete and damaged banknotes and coins be returned to the central bank for disposal.n
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nAdditional costn
nNevertheless, one must remember that the cost of removal does not necessarily mean saving.n
nWhen the central bank plans to issue digital money (using a cash-centered model), most of the challenges will be replaced by new challenges.n
nSpecifically, these challenges include:n
nnCost: The marginal cost of making a digital currency is close to zero. Then the cost here includes the procurement of new and skilled resources.n
nCounterfeit money: may use a notary or other central model to review the double payment problem. The network security team will be responsible for monitoring the system.n
nMarket preparation: It is important for citizens and institutions to be prepared to accept electronic fares provided through mobile devices. When a citizen can hold a digital currency in his wallet, the financial services that can be used will change the way financial services are delivered.n
nDistribution: The distribution of digital money is similar to the distribution of physical cash. The central bank is likely to be encrypted way to the bank issued a digital currency. Customers can store, send and spend digital money through bank-managed wallet.n
nTheft: theft prevention requires the use of private key infrastructure (PKI), hardware security modules and other network security layer.n
nDestruction: how the central bank to destroy the circulation of the currency need to be determined according to the situation of different central banks themselves, and put forward on why and why the destruction and other issues.n
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nHighlight differencesn
nThis is not to say that there are no other factors to consider.n
nThe central bank can qualify all transactions by issuing digital money to complete their tasks. Remember that anonymous transactions are one thing that worries international organizations such as FATF (FATF).n
nIn addition, the loss of anonymity and the arrival of real-time taxation may be of great importance and disturbing, which is the result of currency dematerialization.n
nHowever, the issuance of digital money, the central bank will also face the comparison.n
nOften, the money supply in most private currencies is insufficient. In contrast, the central bank has an open checkbook and the committee’s money supply.n
nPrivate money is created, protected and upgraded by some of the smartest people in the field of cryptography. While the central bank relies on cooperation with large-scale consulting technology providers.n
nPrivate currency has no concept of borders – they are global. While the central bank built a fence for the national currency.n
nPrivate currency is free to change and flows into the network to produce the tokens market. The central bank’s digital currency is considered to allow the approved participant to build on a closed-loop (national) financial service.n
nThese differences are extremely strong. The fate of many nation-states will depend on how the central bank decides how to act. One of the possible problems facing the central bank is that once the central bank issues their own digital currency, they will be more striking to compete with existing encrypted currencies.n
nAnd these areas of difference will be more dazzling.n

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