China is testing a digital currency. In the US credit cards are big. They let you pay without physical money and they give people a line of credit. Charging them 15% interest rates. Yes, this is an actual business model. The other form a revenue is a 3% cut the card company gets from the transaction. There is a convoluted network of institutions involved in a credit card purchase. Enter ‘credit card payment flow diagram’ in image search and you will see. It is not that complicated. But it is also not that easy that you just use ‘visa’ or ‘master card’. Tandem Computers ran for a long time these transactions. So payments are being processed by computers. But they behave as if you still use Knuckle buster to initiate a paper trail.
The system kinda works. It is inherently unsafe and slow. Lots of people are involved. Their jobs are of the kind of a switch board operator in the early days of the telephone: A tech system that requires glue by people since it has not full matured. Those are always horrible jobs. Just ask an assembly line worker.
Since everybody carries a connected computer around you can replace physical money with digital one. You “just” need a system to do so securely and reliable. Technically entirely possible. And China is heading that way.
I bought a geiger counter board the other day. Arrived in less than a week in Europe. It was packaged really well. Documentation? A WeChat QR code. So I might as well get an account with them.
Alipay – not digital money but a replacement for credit cards – gets accepted in more and more places outside of China.
Much like we have Paypal accounts and credit cards we will have Digital Renminbi accounts. First to just get better service, a better price on a little trinket. But since it will work and will be easier than other things we will use it more and more. Out of the sudden the world will use 3 currencies, not 2. Right now people use their local currency, and they use US dollars. If they know or not. The US dollar is being used to buy lots of stuff. Like Oil etc. It is the currency that steps in when local currencies have flaws. Digital Renminbi will be a 3rd currency. Driven by ease of use and Security. Many people don’t like the dominance of Amazon. But they end up using them anyway since the experience is just better than those with other services. Same with Google. People don’t like China and how it ignores our beloved Democracy. But when you need a geiger counter board you get it from China. A working digital currency can be so much cheaper than other means of transactions. I pay 3% for credit cards and 1.3% for international wires. I’d rather keep that money. I would gladly use Chinese Money if my loss would be 0.5%. Technically charges as low as 0.01% are possible. The amount of data you need to transfer is really really tiny. Think oil tankers full of condensed water mist. One of these drops that are so so small that they can float is your transaction. The oil tanker is the Internet pipelines that people have to watch 4K TV. The software you only need to create once. Cost is in the backbone systems. Here we think water mist drops and Water bottles. A little bit of work, but not much.
Other countries will not be able to get a digital currency going. Facebook tried with Libra, and failed.
This might happen by 2030.