China’s Gov-Backed Digital Currency Is Ready to Be Deployed
BEIJING – On August 11th, 2019, the People’s Bank of China (PBoC) announced that a government-backed digital currency is ready to be deployed after some five years of research and development.
It was almost predictable, as most governments and organizations who previously banned the use or exchange of cryptocurrencies in their local networks are periodically announcing their own digital currency systems.
Same happened with Facebook’s Libra after Facebook banned anything that has to do with cryptocurrency advertisement, ICOs, or referrals that lead to cryptocurrency exchange mediums, such as Binance.
Similar incidents can be observed with Venezuela’s approach, although in its case, a cryptocurrency was more of a savior, considering the inflation the country suffered during 2018, but still, a move that followed after the ban of usage of cryptocurrencies and/or other digital assets that tend to have a monetary value.
China is already digital
China is not a newcomer when it comes to digital payments, and if anything, it should be the first country you’d expect to run fully on crypto.
From AliPay to WeChat, the advanced South-Chinese netizens were already using digital payments for almost a decade now, but this is the first official government-backed digital currency that is meant to run on a blockchain.
Obviously, and most likely, the currency will be an ‘insider thing’ for Chinese residents, and it won’t be able to be tracked by Cryptocurrency trackers such as CoinMarketCap or CoinCodex, similar to IBM’s blockchain platform, Hyperledger, that’s being used by major banking institutions, academia, and government organizations.
Transparency is the key here, just not the transparency an individual user would expect. Indeed, the government can have a broader view of the internal economic system, but that doesn’t necessarily mean that they would be sharing it with the users of the economic network, as seen in traditional decentralized distributed ledger systems, such as Bitcoin (BTC).
PBoC’s currency is not your typical crypto
Deputy Director at People’s Bank of China, Mu Changchun says that the state-backed digital currency that utilizes blockchain architecture is now ready after being successfully developed and tested.
However, he was unclear on the official release date of the currency, as well as other key factors that can identify the project’s true nature.
In addition, Changchun says that the forthcoming digital currency is not just promoting innovation in a complex-economy with a vast territory and a large population, but is an attempt to improve accessibility and adoption among the public.
In his own words, the currency is tailored for “small-scale retail high-frequency business scenarios”, and it won’t follow traditional crypto’s footsteps, as it uses a more complex architecture.
Head of research for PBoC, Wang Xin, added that the institution was following the development of cryptocurrencies, blockchain technology for fintech solutions on a global scale, and even watched Facebook’s Libra currency up-close and for some time now.
Hence, the development and launch of their own currency had to take place when fully aware of the competitive advantages and disadvantages of each blockchain respectively.
That might worry us about Bitcoin and other major cryptocurrencies’ future, but it is definitely one more sign that blockchain technology is here to stay.