(FinancialHealth.net) – Cryptocurrency. Bitcoin. Do you remember when that trend started and everyone thought it was just a passing phase? Something that was mainly used between gamers and really didn’t matter much if you weren’t part of that world?
Cryptocurrencies are a complex sequence of mathematical formulas run on a computer, shared on a public ledger by use of blockchain technologies that kept track of every transaction processed. It sounds like gibberish to most people, but certainly not to those who got rich overnight when the value spiked.
Jump to the present day and you find that at the time of this writing (January 13, 2020), Bitcoin now has a value of $8,192. Granted, this is down from it’s high of $19,891 in 2017, but $8K is still certainly significant. So much for a passing phase.
Now, if you’re asking yourself, why is this important to me, chances are you don’t own any (if you do, you probably already know the volatility of cryptocurrencies). One of the most important issues with Bitcoin is that it’s not controlled by an independent central authority, such as any government in the world. Maybe that nuance slipped by some, but it got China’s attention.
For the past 5 years, China has been working on its own cryptocurrency, the digital Yuan. This currency is expected to make its appearance later this year. Don’t assume it’s just another Bitcoin though. There are a few important differences.
- Yuans will be “tokenized”
- The central bank of the second-largest economy in the world will be backing it
- A large portion of the value will come from China’s ability to impose taxes on it
- People’s Bank of China decides who gets to participate
- Tokens will be supplied through the banking system
- Tokens will replace some part of tangible money
Bitcoin and the digital Yuan may not seem important right now but consider a few significant facts. It’s technology, and technology is moving at the speed of light these days. If digitized money catches on, it could change the face of the global economy as we understand it. As reported on NPR.org, “Digital currencies could trigger an upheaval in the global financial system.” If this happens, it affects us all in some way, whether we like it or not.
We’ll keep an eye on this ever-changing technology for you.
~Here’s to Your Financial Health!
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