Paper money has been around since its invention by the Chinese 1,200 years ago. Now, China is leading the charge with another monetary innovation: digital currency.

Paper money was invented out of necessity. Carrying large bags of metal coins over long distances wasn't practical. And Chinese businessmen weren't about to cut their profitable trade routes short just because their horses couldn't carry that much weight or because highway bandits were waiting.

With their new printing presses, Chinese bankers began printing paper notes stamped with an official seal. These could be exchanged for coin money once traders reached their destination.

No one had ever seen money so light that it could fly away in the wind, so they dubbed it flying cash.

Once again, China is on the leading edge of a new kind of currency using the latest technology.

The head of the People's Bank of China said recently that a Bitcoin-like "cryptocurrency" is in development, which will be controlled by the central bank.

This type of digital money has no physical form but is created and circulated electronically. It is linked to the blockchain, a type of publicly accessible super database.

The purpose of the blockchain database is to record and store all current and historical Bitcoin transactions. So when someone wants to spend Bitcoins, computers worldwide can check the blockchain to verify that the Bitcoins belong to that person.

There is no need for a financial middleman such as a bank to verify the transaction like there is when an individual makes a purchase using a credit or debit card. It saves time, and there is no fee for the service.

Bitcoin transactions are efficient and could save individuals and businesses billions of dollars. As the chart below shows, the number of Bitcoin transactions has exploded recently as people become more comfortable using it.

As this technology improves, predictions are that it will be useful for everything from stock trading to casting an election ballot.

Blockchain technology also give access to online purchasing for a much larger section of the world's population. As of now, up to 75% of consumers worldwide don't have a bank account or a credit card and can't shop online.

With the blockchain, anyone with a cellphone can make a digital cash transaction.

This would be good for any business that sells online. They could attract customers from around the world and process the transaction quickly and at a very low cost.

Now governments worldwide are looking into launching their own digital currencies, including Canada, China, Ecuador, the Philippines and the United Kingdom.

Some say that governments have other motivations besides just helping their citizens save time and money.

They say that replacing cash transactions with digital currency would mean that there would be more financial surveillance, and many people think that the government already knows enough about them.

This also supports the theory that governments are waging a war on cash.

The European Central Bank has already decided to get rid of the 500 euro note, and there are calls for the United States to discontinue the $100 bill. Preventing money laundering and helping control crime and terrorism are given as reasons.

But less cash and more digital currency would also give central banks and governments more control over the money supply.

As it stands, central banks want people and businesses to spend and invest their money instead of saving it, thereby stimulating economic growth and fighting deflation. So they lower interest rates to make hoarding cash in bank accounts unattractive.

But low rates haven't done enough for the global economy in the past decade. With rates already near zero, banks have started experimenting with negative interest rates.

The idea is that banks will prefer to lend the money instead of paying to hold it. This would result in more money available to spend, and this should stimulate the economy.

This hasn't had the desired effect. It makes more sense to some bank clients to withdraw their cash and keep it at home rather than paying bank fees while earning zero interest.

This does nothing for central banks that want their clients to use their savings, not hide their money under a mattress.

If, however, withdrawing hard currency wasn't an option, if the system was cashless operating on digital currency, a central bank could have more control. It could tax deposits, forcing would-be savers to spend or invest instead.

Some respected economists say that an end of cash would help the global economy.

As for China, it may also be looking for a way to gain more control over the money leaving the country.

Bloomberg estimated that $1 trillion left China last year, which is seven times more cash than what was taken out of China in 2014.

With four of the five largest Bitcoin exchanges based in China, it is the largest market for this digital currency, and the most traded currency on Bitcoin exchanges is the Chinese yuan. No wonder China is leading the charge when it comes to developing a digital currency that it can control.

Exchanging paper money for goods or services isn't going away any time soon. And time will reveal the real motivations of governments' interest in digital cash, whether it is to help their citizens or control them.

Kim Iskyan is the founder of Truewealth Publishing, an independent investment research company based in Singapore. Click here to sign up to receive the Truewealth Asian Investment Daily in your inbox every day, for free.

This article is commentary by an independent contributor.