What is digital currency?

Digital currency is an alternative currency in the form of electronic money and legal tender, which must be issued by the central bank. Both digital gold coins and cryptocurrency belong to digital currency, not online virtual currency, because it is not limited to virtual space, but is often used for real goods and services transactions, such as bitcoin, Litecoin, bitcoin stocks and so on. At present, there are thousands of digital currency distributed around the world.

Extended data:

1, the impact on financial infrastructure

The decentralized mechanism of value exchange based on distributed ledger technology has changed the basic settings of total and net settlement on which financial market infrastructure depends. The use of distributed ledger will also bring challenges to trading, clearing and settlement, because it can promote the non-intermediation of traditional service providers in different markets and infrastructures. These changes may have a potential impact on the market infrastructure outside the retail payment system, such as large payment system, securities settlement system or transaction database.

2. The influence on financial intermediaries and financial markets in a broad sense.

If digital currency and the technology based on distributed ledger are widely used, it will bring challenges to the participants in the current financial system, especially the intermediary role of banks. Banks are financial intermediaries, perform the duties of supervisors and supervise borrowers on behalf of depositors. Usually, banks also carry out liquidity and term conversion business to realize the financing of funds from depositors to borrowers. If digital currency and distributed ledger are widely used, any subsequent disintermediation may have an impact on the savings or credit evaluation mechanism.

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Baidu Encyclopedia-digital currency