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Is NFT a future form of digital currency?

All money is some form of token, while coins are fungible in today's terms and paper money is non-fungible. Coins are made of a piece of alloy with a special mark on them. Paper money is given a serial number. Each paper currency has an "id card". And for each coin, it doesn't has ID. The serial number is only convenient for the issuer to identify and control. In circulation, the counterfeit detector does not seem to be able to find out whether the serial number is correct or not, but only locks the identity of the counterfeit note with the serial number imitated by the counterfeit note after confirming the counterfeit note.

So what's the difference between bank account currency and paper money?

The numbers in the bank account are in the form of balance, which is completely confused and does not have the identity of banknotes, let alone the value of coins. In the 19th century, after the great development of the banking industry, coins gradually shrank into "subsidiary currency", and the bank window for exchanging paper money for precious metals was gradually closed. Until the "Nixon Shock" in the early 1970s, the bank window for exchanging paper money for gold was completely closed, and paper money became 100% bank money. What Keynes called "modern money is account money" meant that the form of money leaving bank accounts either did not exist or only briefly left. Paper money, for example, in addition to being recycled by the issuing bank, is always returned to the commercial bank several times in circulation, and once returned to the bank, the paper money is placed in the bank account. That is, even with a completely separate serial number, paper money is still "account money," and it has to be added to account balances from time to time.

The question comes back to the money itself, should it be fungible or non fungible?

People believe that a non-bank Fungible currency is good, which is the so-called "decentralized" currency practice, and believe that it can solve the problem of aggregate stability and the protection of currency privacy. However, these practices are far from being successful or even getting closer to their goals. That is to say, the digital innovation of the balance account currency system is still difficult to achieve decentralization. The centralized digital currency -- digital fiat currency -- can more effectively overcome the shortage of bank account currency and improve monetary efficiency. In other words, the typical representative of non-bank fungibile currency is digital fiat currency. Issuing and operating digital fiat currency is a revolution of the central bank itself and the banking system.

Today, non-Fungible digital currencies are at least a necessary complement to fungible digital currencies. It can also achieve large-scale and standardization, and it is superior to Fungible digital currency in smart currency, privacy protection, account innovation and other aspects. In today's terms, all currencies in the history of money up to now have been "tokens", mainly fungible and non-Fungible tokens. As shown above, the two coexist because of their respective advantages and disadvantages, and are not mutually exclusive. Currency digitalization requires both the Fungible token mode of account balance currency and the non-Fungible mode of account balance. These are two complementary directions for digital currency development.


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