e-CNY, or e-CNY for short, is a digital version of the Chinese fiat currency (renminbi, or CNY in ISO standards). It is the first major central bank to issue a digital coin, and is quickly becoming a source of worry in the west. But the tech behind e-CNY is far less exciting than the hype. As noted by the government, the trial period is still early and it’s unclear how users will react to it. However, this development is laying the groundwork for a wider adoption of e-CNY.
One of the biggest issues with digital currency is that it is difficult to determine its value. The Howey Test, a widely-cited shorthand used by the Supreme Court, focuses on whether a product is a security. But digital currencies don’t meet the Howey test because they lack a promoter, issuer, or pool of funds. Thus, Ehret argues that many cryptos would fail the Howey Test and that we need a new test for digital currency technology.
One way to improve the efficiency of digital marketing is through A-coins. A-coins may include advertising and marketing content, and may represent an electronic trading environment. As such, a digital coin exchange environment may include an A-coin platform 102, a server of one or more advertisers and media agencies, and at least one first-generation mobile consumer device 108-1 and an owner device 110. Once A-coins are issued, they may be used to perform transaction-based loyalty marketing for the brands.
A digital coin platform receives a distribution request from an entity server. This digital multimedia content comprises a first coin associated with an entity. Another coin associated with a consumer is transferred from the digital coin platform to the entity server when the content is consumed. A digital coin platform may then transfer the first coin to the entity server, and then transfer the second coin to the mobile consumer device, where it is consumed. The first coin and the second coin are recorded as a result of the transaction and recorded.
Eventually, a digital coin exchange environment will provide a system that enables advertisers and media companies to track digital usage and assess the effectiveness of digital advertising content. It may also be a part of an electronic trading marketplace, where a user can trade his or her digital coins for goods and services. In the meantime, it could be used as a digital loyalty token. It would make it possible to create a system of programmable money, with the ability to change the value and currency whenever the user wants.
Although a central bank digital coin (CBDC) would be a liability for the Federal Reserve, its adoption by the general public would not be. Since CBDCs are not a commercial bank, they would work in conjunction with the private sector and leverage existing identity management and privacy frameworks. A CBDC could also support faster payments, widening consumer access to the financial system. Further, the CBDC may help maintain the dollar’s international reserve currency status.