Digitization and the Evolution of Money as a Social Technology of Account

Abstract

From Aristotle to Ricardo and Menger, economists have emphasised the function of money as a medium of exchange together with the intrinsic qualities that increase its saleability and credibility as a most liquid store of value. But the social institution of money co-evolves with technology. It is significant that the advent of digital cryptocurrencies was initiated by computer scientists and has taken economists completely by surprise. As a consequence, it also forces our profession to rethink the basic phenomenology of money. In accordance with the views of Wieser and Schumpeter, digitization brings to the fore its immaterial function as a standard of value and social technology of account, which increasingly absorbs that of a medium of exchange. The potential impact on economic policy is huge. The variety of different crypto coins has proven the technical feasibility of competing private currencies as proposed by Hayek. In the long term, however, there is reason to doubt the persistence of intense competition. One must fear that major digital platforms will extend their current dominance in multisided virtual market places to include digital payments and money. Central banks are increasingly anxious to preserve public sovereignty over the common unit of account and consider issuing their own digital fiat money. After the current era of intense creative experimentation, the potentially new spontaneous order of private crypto-currencies is likely to be supplanted by central bank digital currencies (CBDCs), the design of which will depend on deliberate public choices and policies.

Review on Digital Currency

“…Generate multiple copies of the same ledger, thereby enhancing the security of the system. [8] Anonymity means that restrictions on anonymous CBDC transmissions can be enforced without recording the amount of CBDC spent by users, thereby protecting users' privacy [5], security, which is the advantage of the anonymity of digital currency. Additionally, digital currency, DCEP as the example, compared to traditional crash is more convenient.…”

Central Bank Digital Currencies: The Advent of Its It Governance in the Financial Markets.

“…The authors pointed out that there are still some problems to be solved (Zhang et al, 2021). Peneder (2021) Mentions that the most ambitious project about CBDC seems to be the Digital Currency Electronic Payment system (CD/EP) initiated by the People's Bank of China (PBC). Digitizing the monetary base through a renminbi-backed form of electronic payment, according to him it will likely be the world's first comprehensive CBDC to become operational.…”

“…Digitizing the monetary base through a renminbi-backed form of electronic payment, according to him it will likely be the world's first comprehensive CBDC to become operational. The biggest goal is to reinforce the PBC's monetary authority and prevent the proliferation of other international digital currencies, while preserving intermediation within the traditional binary system of commercial and central banking (Peneder, 2021).…”