The recent announcement by the United States to strongly support the development of cryptocurrencies and crypto assets, along with plans to build a national Bitcoin strategic reserve, has sparked intense global discussion about the future of digital currencies. Digital currencies represent a new form of money that exists digitally, leveraging cryptographic technology and distributed ledgers. They feature decentralization, traceability, and immutability, and can be used for transactions and value storage. This category includes central bank digital currencies (CBDCs) and virtual digital currencies. Their rapid development not only introduces new monetary forms and asset classes but also holds the potential to significantly reshape the international financial system.
Understanding the Three Types of Digital Currencies
Globally, digital currencies are primarily categorized into three types: cryptocurrencies like Bitcoin, stablecoins such as USDT and USDC, and central bank digital currencies (CBDCs), exemplified by China's digital yuan (e-CNY). Each type possesses distinct characteristics.
Cryptocurrencies: Decentralized and Volatile
The value of a cryptocurrency is not determined by national sovereign credit nor by being pegged to another currency or financial asset. Instead, it is governed by a complex computer algorithm. For instance, Bitcoin is created through a process called "mining," which requires powerful computers to solve cryptographic puzzles. Its total supply is algorithmically capped at 21 million coins. Approximately 19.8 million Bitcoins are already in circulation, leaving just about 1 million left to be mined. Bitcoin's most notable feature is its decentralization, as it is not backed by any national credit. Similar to gold, its fixed supply is seen as a hedge against inflation tendencies of central banks, making it a potential tool to mitigate country-specific currency risks. However, Bitcoin's most significant drawback is its extreme price volatility. Its price once peaked at over $100,000 per coin and was around $86,000 in early March 2025.
Stablecoins: Pegged for Stability
Stablecoins derive their value from being pegged to other currencies or financial assets. The most popular stablecoins are USDT and USDC, which together account for about 90% of the global stablecoin market capitalization. As the name suggests, both USDT and USDC are pegged 1:1 to the US dollar, making them dollar-backed stablecoins. There are also stablecoins pegged to the euro, gold, other cryptocurrencies, or a basket of commodities. For every unit of stablecoin issued, there must be a corresponding amount of currency or financial assets held in reserve. Consequently, stablecoins exhibit much more stable prices compared to highly volatile cryptocurrencies.
Central Bank Digital Currencies (CBDCs): Sovereign-Backed Security
A CBDC is a digital currency issued by a specific country's central bank, backed by that nation's sovereign credit and pegged 1:1 to its regular fiat currency. The primary advantage of a CBDC is its issuance by a central bank, which can provide lender-of-last-resort support during significant value fluctuations, resulting in very low financial risk. However, the reputation of a CBDC is intrinsically linked to the performance of its underlying fiat currency. If the regular currency experiences high exchange rate volatility or rapid purchasing power depreciation, the appeal of its digital counterpart will naturally be weaker.
Impact of Bitcoin on the Global Financial System
Despite being a form of digital currency, Bitcoin's characteristics prevent it from truly fulfilling the functions of money. Its massive price volatility makes it unsuitable as a unit of account for pricing goods or as a medium of exchange for transactions. Furthermore, its fixed supply means it cannot effectively regulate an economy, which typically requires a growing money supply to match expanding economic output. In normal circumstances, a central bank continuously issues new currency to meet demand.
Therefore, Bitcoin is not truly a currency but rather a unique type of financial asset with investment value. There is significant debate in the market regarding whether Bitcoin is a risk asset or a safe-haven asset. Its high volatility aligns it with risk assets. Yet, its price often moves inversely to the US dollar, suggesting properties of a hedge against dollar fluctuations, akin to a safe-haven asset.
The Transformative Potential of Stablecoins
Among the three types of digital currencies, stablecoins possess the greatest potential to significantly impact the international financial system. As they are pegged to sovereign currencies, stablecoins indirectly inherit the properties of those currencies. Dollar-backed stablecoins, in particular, embody the characteristics of the US dollar, offering general exchange rate stability that makes them more readily accepted by investors globally.
The market capitalization of global stablecoins has grown rapidly, nearing $180 billion by the end of 2024. They are gaining ground in several key areas:
- Trading Medium in Crypto Markets: Dollar stablecoins are increasingly becoming the preferred medium of exchange for trading between cryptocurrencies like Bitcoin and Ethereum and other currencies. This effectively allows dollar stablecoins to扮演 the role of the US dollar within the virtual world.
- Liquidity in Decentralized Finance (DeFi): Some institutions within DeFi ecosystems are now using dollar stablecoins to provide liquidity. For example, entities seeking loans can directly borrow dollar stablecoins from specific platforms.
- Wealth Storage in Volatile Economies: In some developing countries with high domestic currency volatility, residents and businesses have started using dollar stablecoins as a reliable international currency for storing wealth. In certain cases, they even begin to替代 the local currency.
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Dollar stablecoins not only strengthen the link between the traditional monetary system and the virtual world but also fill the demand gap for US dollars among households and firms in developing nations. Consequently, this type of digital currency is likely to reinforce the US dollar's dominant position in the international financial system. By tightly coupling the dollar's international credit with virtual world applications, dollar stablecoins could significantly entrench dollar hegemony.
The Role of Central Bank Digital Currencies (CBDCs)
A CBDC is essentially a sovereign currency in digital form. Its strength and low risk are ultimately dependent on the competitiveness of the underlying fiat currency. However, the scope of its application is also crucial. For instance, the Chinese yuan is globally recognized as a stable sovereign credit currency. Yet, the digital yuan (e-CNY) is currently restricted to retail scenarios—transactions between individuals and businesses—effectively only replacing cash (M0). This limitation means it is not yet applicable for transactions between businesses (B2B), between businesses and financial institutions, or interbank transactions (B2B2B). The primary constraint on the digital yuan's development is thus its limited use case. The People's Bank of China initially restricted it to replacing M0 to minimize disruption to the existing commercial banking system during its pilot phase.
Strategic Responses and Future Directions
With three distinct development paths for digital currencies globally—cryptocurrencies, stablecoins, and CBDCs—each has its own advantages, disadvantages, prospects, and applications. A prudent strategy involves not betting on a single type but pursuing a multi-faceted approach to maximize the benefits of digital currency and asset development.
- Expanding CBDC Scope: It is crucial to rapidly expand the digital yuan's replacement scope from M0 (cash) to M1 (cash + demand deposits) and even M2 (cash + all deposits). Only by upgrading its scope can the application scenarios for the digital yuan be fully broadened, promoting its use both domestically and internationally and bolstering the yuan's internationalization.
- Developing Chinese Stablecoins: Promoting the construction of China's own stablecoins is essential. Expanding the use of digital tokens on internet platforms can better integrate the sovereign credit of the yuan with the global application scenarios of Chinese platforms. With proper design and risk controls, expanding the use of these platform tokens can significantly enhance the international standing of the yuan, providing a more robust response to the challenge posed by dollar stablecoins.
- Promoting a Digital SDR (e-SDR): At the International Monetary Fund (IMF) level, trialing and promoting a digital Special Drawing Right (e-SDR) should be encouraged. The SDR is a supra-sovereign currency created by the IMF, pegged to a basket of currencies including the US dollar, euro, Chinese yuan, Japanese yen, and British pound (with weights of approximately 41.73%, 30.93%, 10.92%, 8.33%, and 8.09% respectively, subject to change). Currently, SDRs are only used for transactions between the IMF and member countries and among member countries themselves. A diverse ecosystem of digital currencies is far preferable to a single currency dominating the digital landscape. An e-SDR could expand the use of a supra-sovereign reserve currency in the digital realm and virtual space, also aiding the diversification of the international monetary system.
Frequently Asked Questions
What is the main difference between a cryptocurrency and a stablecoin?
The core difference lies in what backs their value. A cryptocurrency's value is derived from algorithms and market demand, leading to high volatility. A stablecoin's value is pegged to a stable asset like a fiat currency (e.g., the US dollar) or commodity, ensuring much greater price stability.
Can Bitcoin replace traditional money?
It is highly unlikely in its current form. Bitcoin's extreme price volatility makes it impractical as a daily medium of exchange or unit of account. Its fixed supply also prevents it from being used by central banks to manage economic policy. It is primarily considered a speculative investment or store of value asset.
How do dollar stablecoins strengthen the US dollar's global role?
They extend the dollar's usability into the digital and decentralized finance (DeFi) ecosystems. By serving as the primary trading pair in crypto markets and a savings vehicle in countries with unstable currencies, they create new, pervasive demand channels for dollar-backed assets, reinforcing its dominance.
What are the risks associated with using stablecoins?
Key risks include the potential for the issuer to not hold sufficient reserves, leading to a collapse in value (e.g., if the peg breaks). They also face regulatory uncertainty and operational risks like cybersecurity threats or technical failures within the issuing platform.
How does a Central Bank Digital Currency (CBDC) differ from my online banking money?
The money in your online bank account is a commercial bank liability; it's a digital record of a claim you have on that bank. A CBDC is a direct liability of the central bank, making it a direct claim on the state. This could potentially make it a safer form of digital money, though the practical differences for users might be minimal.
What is the goal of developing a digital yuan (e-CNY)?
The stated goals include modernizing the payment system, improving financial inclusion, and increasing the efficiency and traceability of transactions. A longer-term strategic goal is to facilitate the internationalization of the Chinese yuan by providing a modern, digital tool for cross-border trade and finance.