The underlying logic of the profound transformation of currency and payment.

With the advancement of information technology, currency and payments will undergo profound changes. The inevitable direction of currency development is to move towards an intangible, digital, and intelligent stage with fully available total supply and infinitely divisible units. Utilizing advanced technology to maximize the expansion of payment settlement platforms and reduce settlement intermediaries to achieve direct point-to-point payments between both parties is the inevitable direction for the development of payment settlement.

Currency must accelerate its move towards digitization and intelligence

The essential attribute of currency is a measure of value (unit of account), its core function is a medium of exchange (payment tool), and its fundamental manifestation is the strongest liquidity (which needs to be backed or protected by the highest authority or highest credit) of value tokens (transferable value certificates). These are the three indispensable elements for understanding currency, which have remained unchanged from the beginning to the end (if changed, it would no longer be currency). However, the carriers or forms of currency (such as shells, coins, paper money, deposits, electronic wallets, digital currencies, etc.) and their operational methods need to be continuously improved to enhance efficiency, reduce costs, tighten risk control, and better fulfill the role of currency in promoting exchange transactions and economic and social development. To this end, it is essential to have an accurate understanding of the essence and operational methods of currency.

First, as a measure of value, the most fundamental requirement for currency is to maintain the basic stability of its value. This requires that the total amount of currency must change in accordance with the changes in the total value of tradable wealth that is priced and settled in currency, maintaining the basic stability of the overall correspondence between the total amount of currency and the total value. From a societal perspective, the total amount of currency and the total value of tradable wealth overlap; among them, wealth value is the real foundational element, while currency is merely a representation of wealth value (unit of measurement), representing the claim to wealth value, and currency is not wealth itself. Therefore, the economic form represented by the generation and operation of wealth is referred to as the 'real economy', while the economic form represented by the issuance and operation of currency (including derivative financial activities) is referred to as the 'virtual economy'. Without the value support of real wealth, currency would be worthless. Of course, for individual members of society, currency represents a claim to value and indeed belongs to their assets. This dual attribute of currency as “overall virtual yet individually real” can indeed confuse people's understanding of currency, requiring careful explanation and accurate comprehension.

In order to maintain the basic stability of currency value, all physical assets that serve as currency with limited supply (such as gold, which has limited reserves on Earth) or virtual assets (such as Bitcoin, whose total supply and periodic increments are completely locked and cannot be adjusted by the system) will severely constrain exchange transactions and economic and social development due to their supply not keeping pace with the infinitely growing demand for tradable wealth value, which does not meet the essential requirements of currency. They must inevitably withdraw from the stage of currency and return to their original role as tradable wealth. Currency must completely exit from specific physical assets and truly serve as a scale of value, medium of exchange, and value token, ensuring that its total amount can change in accordance with the changes in tradable wealth value. From this, it can be confirmed that currency has evolved from the initial natural commodity money, to regulated metallic coins, further to metal-backed paper money, and then to pure credit money that is detached from any specific physical assets, continuously shedding physical forms, highlighting essential characteristics, and ultimately breaking free from any asset forms and their quantity limitations, moving towards a stage of intangibility, digitalization, and intelligence where total supply can be fully provided and units can be infinitely refined, which is the inevitable direction of currency development. From this, we can conclude:

Credit currencies no longer need to be anchored to any specific assets, nor do they require specific reserves as a value support. Currency is supported by the overall wealth value, and the scale of gold reserves, foreign exchange reserves, etc., is relatively limited compared to the total amount of currency (total wealth value); they are merely means for central banks to adjust the market against unexpected fluctuations and are difficult to support the value of the entire currency supply. The thinking of seeking a new anchor for currency (specific anchoring objects) is erroneous and represents a regression rather than innovation.

Cash (paper money and coins) acts as a carrier or form of currency, just like the shells and minted coins that once served as currency; it is not currency itself, and ultimately must exit the currency stage. Now, the forms of currency are increasingly shifting to deposit accounts (electronic wallets also belong to a type of deposit account), and currency payments are increasingly changing from direct "cash payment settlement" to "transfer payment/accounting settlement" of deposit accounts. The proportion of cash and cash payments in the total amount of currency and total currency payments is already very low and will continue to decrease. Therefore, equating currency with cash, and equating currency payments with cash receipts and payments, has completely deviated from the essence of currency and social reality, which is very incorrect.

Secondly, as a medium of exchange, the payment clearing tools and methods of currency must continuously improve to enhance efficiency, reduce costs, and ensure strict risk control. The methods of currency payment clearing have gradually shifted from traditional cash transactions to more and more “transfer payments/bookkeeping clearing” using deposit accounts (including bank card accounts, electronic wallets, etc.), which is also the inevitable direction for the development of currency. Transfer payments/bookkeeping clearing can replace cash payments, reduce the demand for cash, ensure strict payment monitoring, and move towards smart accounts, with deposit accounts becoming a new carrier or form of currency. Deposit accounts can include basic information required for management, such as the account holder's identity information, currency symbols, account passwords (public and private keys), and smart contracts, no longer requiring encryption of cash (such as banknotes), but rather encrypting the entire process of accounts and transfer payments. On the basis of ensuring security, it is no longer necessary to rely on dedicated communication lines or local area networks for transfer payments; instead, public internet or blockchain platforms can be utilized, even transcending national boundaries, achieving the widest coverage of users worldwide, with users registering directly on the platform (registration is equivalent to account opening, and the registration address serves as the user account) without needing clearing institutions as intermediaries (de-intermediation), realizing peer-to-peer instant payment clearing between payers and payees on the same platform, thereby reducing intermediary links, greatly improving efficiency, reducing costs, and ensuring strict risk control.

Again, as the most liquid value token, currency means that there must be competition between different currency carriers or forms of expression and their operating methods. Only the currency that receives the highest authority or credit protection can survive in this competition. The highest credit protection is not only needed during the credit currency phase, but has been necessary since the birth of currency, becoming one of the main characteristics of currency.

In today's world, where sovereign independent countries or regions are still the basic components, and the United Nations cannot replace national sovereignty, the highest authority or credit is national sovereignty and national credit. Therefore, currency ultimately manifests as national sovereign currency or legal tender, even if the world becomes highly unified and forms a unique global village, the currency at that time will still be the world sovereign currency.

In international economic and trade exchanges, it is first necessary to determine which currency will be used as the pricing and settlement currency. If the domestic currency is not an important international currency, it is also necessary to consider which currency to hold in reserve for international payments. As a result, there will inevitably be comparisons and competition among various currencies, with the most important criteria being the comprehensive comparison results of "safety, liquidity, and profitability." Behind this lies the comprehensive national strength of the currency-issuing country, especially its ranking in terms of international influence. Only the currencies of countries with the most powerful comprehensive national strength and international influence are likely to become world reserve currencies or the number one international currency.

Therefore, in the context of national independence, promoting the denationalization or supranationalization of currency, including the creation of a supranational world currency (such as SDR) linked structurally to multiple sovereign currencies, is difficult to replace sovereign currency and is challenging to implement successfully. The euro is not a supranational currency, but rather a type of regional sovereign currency, because after the official launch of the euro, the original sovereign currencies of its member states completely exited (transferred monetary sovereignty), and the two do not coexist.

Of course, in emerging or specific areas where fiat (sovereign) currency cannot meet certain special needs, tokens can be issued and operated with fiat currency as collateral at a fixed ratio, and redeemed. For example, in China, the Renminbi is the fiat currency, but there are still meal tickets/cards in schools and government canteens, shopping vouchers/cards in malls, and points/Tokens on e-commerce platforms (which can be exchanged for goods as agreed), which are essentially tokens of the Renminbi in specific areas, subject to the oversight of monetary authorities and cannot circulate freely beyond the set limits (otherwise it would impact the management of fiat currency). At the same time, fiat currency also needs to actively improve its operating methods, enhance efficiency, and reduce costs, in order to meet various emerging or special payment needs and replace various tokens.

Payment settlement will inevitably move towards peer-to-peer without intermediaries

In the transfer payment/accounting clearing system, both parties to the payment and receipt first need to open real deposit accounts at payment clearing institutions (such as banks) and maintain sufficient deposits (currency stock) for payment. The traditional practice is:

In the case where a clearing account is established between the banks of the payer and payee, the payer issues a payment notification to their bank, specifying the payer's name, deposit account number, company seal or payment password, as well as the payee's name, bank, deposit account number, transaction contract number, and other elements. After the bank reviews and verifies the details, it deducts the corresponding amount from the payer's account according to the notification and issues a deduction notification to the payer (which serves as the payer's accounting basis). At the same time, the bank sends a transfer notification to the payee's bank and increases the payee's bank's deposits with them (or reduces its deposits at the payee's bank). Once the payee's bank receives the transfer notification and verifies it as genuine, it increases its deposits at the payer's bank (or reduces the payer's bank's deposits with them), while also increasing the payee's deposits and issuing a funds credit notification to the payee (which serves as the payee's accounting basis). Thus, through the adjustment records of the deposit accounts among the relevant parties, the payment settlement of currency (funds) can be completed, replacing the flow of cash with the transfer of currency ownership, which can significantly reduce the costs and risks associated with cash printing, distribution, receipt, payment, and management. In this process, banks and other clearing institutions must not only efficiently complete the transfer/payment/accounting settlement of funds but also meet regulatory requirements such as anti-money laundering, anti-bribery, and anti-terrorism financing, in order to curb the illegal use of currency.

If there is no clearing account established between the banks of the payer and payee, it is necessary to bridge through a bank that jointly establishes a clearing account, ensuring that the accounts can connect and complete the transfer of payment funds. To this end, most countries generally implement a "centralized account opening system" between banks, where each bank opens an account at the clearing center, thereby achieving mutual account connectivity, which can greatly reduce the number of clearing accounts established and the difficulty of management.

In cross-border payment clearing, the situation becomes much more complex. It not only involves the problem of account opening between clearing banks but also, due to the sovereign nature of currencies, the clearing accounts are subject to the regulations of various countries, making it difficult to implement a centralized account opening system internationally. Sometimes, between banks that do not directly open clearing accounts, transfers may need to go through multiple clearing banks (intermediaries) to ultimately complete the transfer of funds from the payer's account to the payee's account. At the same time, there are differences between countries in terms of language, customs, time zones, regulation, and efficiency. If the payment notifications and their encryption methods are not standardized and unified, it will be very troublesome to process, requiring a long time and incurring high costs. Therefore, in situations where centralized account opening for clearing accounts is difficult, there is a need for a professionally shared, neutral, and secure payment message management and processing system internationally, such as the Society for Worldwide Interbank Financial Telecommunication (SWIFT), which can greatly improve efficiency and reduce costs.

With the advancement of communication technology and encryption technology, payment clearing has gradually shifted from the original paper message transmission and manual processing by relevant institutions to telegrams, telecommunications, the internet (computer system connections), and mobile terminal information transmission. The initiator inputs payment information and passwords on terminal devices (including mobile phones), and after the receiving party's computer verifies the password accuracy, it is processed automatically. The methods and means are continuously improved, thereby increasing efficiency, reducing costs, and tightening risk control. As long as both parties of the payment are account holders at the same bank, the internal institutions of the bank are fully interconnected to form a unified clearing platform, which can basically achieve real-time (second-level) crediting of payments.

As can be seen from the above, the payment clearing of currency from the payer to the payee, in addition to the direct cash settlement between the payer and payee, involves at least the following elements:

First, there must be a real and accurate deposit account. In order to meet regulatory requirements such as KYC (Know Your Customer) and AML (Anti-Money Laundering), the deposit account must have the account holder's true, accurate, and complete identity information. After any deposits or withdrawals occur in the deposit account, the account should be credited as soon as possible and the account balance should be updated.

Second, there is a need for a telecommunications channel or network platform for fund transfers and remittances, which forms a unified standard for encryption methods and operational rules. The more this network platform can utilize open and shared infrastructure, the broader its coverage, the more registered users it will have, and the lower the operational and maintenance costs, the stronger its advantages will be, making it more competitive and viable.

Thirdly, promote asset securitization (standardization), digitalization, and tokenization (Tokenization, tokens should not be referred to as代币), to achieve online global 7x24 hours maximum efficiency trading and settlement.

Now, the integration of blockchain and encryption technology enables a single platform to achieve global coverage without borders. The operational rules of the platform are embedded within the system ("code is law"), eliminating the need for a platform controller as an operational intermediary (decentralization). Users register accounts on a unified platform without the need to register at a clearing institution, and there is no need for the clearing institution as a transfer intermediary (disintermediation). Instead, the payer conducts the payment operation themselves, achieving direct peer-to-peer payments with the payee. The platform system participates in distributed verification, storage, and accounting, ensuring that the entire process is open and transparent, traceable, and difficult to falsify. This greatly improves efficiency and reduces costs (if cross-platform transfers are needed, or if platform coins need to be converted into other currencies, additional operations and fees are required), especially in comparison to the traditional cross-border payment clearing system dominated by banks and SWIFT, where its advantages are very evident and it poses a tremendous impact on the traditional payment clearing system.

Now this brand new blockchain technology and platform can promote blockchain native crypto assets (such as Bitcoin, Ethereum, etc.), as well as blockchain derivative crypto assets issued through ICOs (various altcoins), various stablecoins (especially fiat stablecoins pegged to legal tender), non-fungible tokens (NFTs), real-world asset tokens (RWAs, including real data asset tokens RDA), and even tokenized stocks, tokenized bonds, tokenized currency funds, enabling 24/7 uninterrupted trading and clearing on public (permissionless) blockchain platforms globally, thus giving rise to a new borderless "crypto world" and accelerating its development, a trend that requires high attention.

Fourth, when multiple trading and clearing platforms coexist, and the same product needs to operate on multiple trading and clearing platforms separately, it is necessary to achieve connectivity or bridging between different blockchain platforms to solve the issues of fund transfer clearing and information aggregation across platforms. Of course, this cross-platform processing will increase costs and reduce efficiency. If a single platform has a wide coverage, allowing users and products from across the country or even globally to register and operate on the same platform, then cross-platform connectivity or bridging is no longer needed. Therefore, having more trading and clearing platforms is not necessarily better; it should promote as much centralization, specialization, sharing, and fairness as possible.

It can be asserted: Utilizing advanced technology to maximize the expansion of the payment settlement platform and reduce settlement intermediaries, achieving point-to-point direct payments between payers and payees, is the inevitable direction of payment settlement development. Of course, going without intermediaries should not be equated with going without regulation. As an important financial infrastructure, blockchain platforms must meet regulatory requirements such as anti-money laundering, anti-bribery, and combating the financing of terrorism, and cannot simply pursue increased efficiency and reduced costs at the expense of financial regulation.

As can be seen, along with the advancement of information technology, currency and payment will still undergo profound changes. However, the transformation must adhere to its essence and principles, committed to promoting the healthy and efficient operation of currency and playing a better role. It should be particularly noted here that: currency is a very important and should be a quite rigorous concept, and non-currency assets cannot be casually labeled as "currency" or "coin". But now the use of "coin" is very confusing and not serious, calling all kinds of crypto assets "cryptocurrency" or "digital currency", translating NFT as "non-fungible token" (coin must be fungible, divisible, and aggregable; non-fungible things cannot be called coin at all), translating RWA as "real world asset token", as well as various tokenized securities, tokenized funds, tokenized deposits, etc., are all very inaccurate and non-standard, and should be corrected and accurately defined. "Token" can only be translated as "通证", it is an asset, not currency.