Will digital currencies affect national security?

In recent years, the rapid development of digital money based on blockchain technology constitutes a new trend of financial innovation generated by contemporary technological progress. How to clarify the influence mechanism of digital currency on national security has become an important part of preventing major risks.

In today’s world, changes in the monetary and financial systems are having an increasing impact on national security.

‘ If you control the currency, you control the world, ‘ said former US secretary of State Henry Kissinger. Keynes, a British economist, also suggested that there was no more subtle and safe way to subvert the foundations of an existing society than to spoil the currency of the society.

All these highlight the importance of money and finance, which is not only related to the economic development of a country, but also affects the social stability and even the survival of the country. In recent years, the rapid development of digital currency based on blockchain technology constitutes a new trend of financial innovation generated by contemporary technological progress.

However, the use of digital money for money laundering, the sale of drugs and firearms and ammunition was a cause for concern, which had gradually constituted a new challenge to national security. How to clarify the influence mechanism of digital money on national security has become an important content to prevent major risks from being ignored.

The “retention marks” and “traceability” of digital currencies can enhance the convenience and transparency of economic trading activities, but the digital currency itself is exposed to two risks.

The first is the technical level. The digital currency relies on the block chain technology and a system, which will make it suffer from the security impact, such as the hacker attack of the computer system. We have seen many practical problems in this process.

Another risk to digital money is the issue of credit risk. Because there are middlemen in digital currency trading, these middlemen are different from real-world organizations. In reality, organizations are visible and palpable, but the middlemen of digital money are on the Internet, and the stakes are greater.

In recent years, the digital currency exchange security incidents frequently. January 2018 Japan Coincheck Exchange was hacked stolen NEM new currency lost about 534 million U.S. dollars; In February 2018, the trading price of XMRG tokens based on Ether Square rose rapidly to zero after a 787% increase, resulting in a large number of users ‘ economic losses, behind the fact that there was an integer overflow loophole in their smart contract code, and the sell-off after excess coinage caused hyperinflation; In March 2018, hackers on the Binance exchange made more than $100 million by using stolen user information to make massive trades to manipulate market conditions…… There are countless cases like this.

Digital currency belongs to the category of currency, and its direct impact on national security is mainly at the financial level. However, digital currency can be used to pay for investment, especially the purchase of a variety of goods, provide monetary payment for various important activities, and expand its impact on national security.

Digital currency has been organized to pay for drugs, guns and ammunition and other activities, indicating that the impact of digital currency on national security has extended to illegal transactions and other categories.

At present, money laundering through digital money has become possible, and the use of digital money for illegal trade is not uncommon.

These activities have the potential to pose a major threat to national security, foreign policy, economic health or financial stability, with the aim of harming the service sector of computers or computer networks of one or more entities in critical infrastructure, resulting in serious damage to the availability of computers or computer networks and resulting in significant misappropriation of funds or economic resources, Trade secrets, personal information or financial information for commercial competitive advantage or private economic gain.

The current digital currency is just beginning, and if the future develops and evolves into a widely recognized currency, the problem of digital money being used in illegal transactions may escalate or even intensify, and if there is a massive rise in illegal transactions, national security and even the global security situation will not be optimistic.

Combining the attitudes of central banks, it can be seen that digital money is still harmful to national security. Masayoshi Amamiya, deputy governor of the Bank of Japan, points out that the country’s digital currency could harm the traditional financial systems of developed countries. Andrea Maechler, a member of the Swiss central bank’s governing board, also expressed concern about the central bank’s digital currency, and the Russian Treasury, which oversees cryptocurrencies, has said it is not bullish on “encrypted rubles.”

In extreme cases, with the continuous development of non-official digital currencies, the international monetary system may face greater challenges, the sovereign credit monetary system may be significantly adjusted, the monetary sovereignty of countries may suffer a huge impact, and the issue of financial security and even economic security is particularly prominent.