The People’s Bank Of China is planning right now an introduction of its own digital currency. However, this form of e-money is less of a cryptocurrency and more of an electronic form of state currency, as it is not based on the blockchain’s decentralized nature.
Instead, it is perceived by the state as an easier way to monitor and keep a tighter control on the financial system of the country.
Electronic Payments Will Probably Be The Norm.
Perhaps, the most interesting fact about this movement is that the idea is not to provide an alternative currency to regular fiat, but instead, the bank is looking to completely replace the Chinese Yuan with its new electronic coin.
Once released, the people will have the option to download the digital wallet to their smartphones and computers, and they will also exchange their Yuans for the new coin.
Nevertheless,the original report by Bloomberg states that the replacement will be “initial”, and lacks additional information on the permanence of this measure, yet the likelihood of this new electronic currency becoming the standard payments system is high.
Why is that?
Well, thePBOC would know every time money exchanged hands, and it would be more efficient in tracking “shadier” trades like money laundering, which are easier to perform with cash. This thesis of a currency that is much easier to trace than fiat is what makes it likely for the Yuan to be replaced in the future.
That is, without counting on the fact that it would give the Chinese government a view into its the lives of its citizens that lacks any precedent.
China And Cryptocurrencies: A Fierce Competition.
While some people would think that this may come off as an adoption of cryptocurrencies on behalf of China, it is—in fact—”fighting fire with fire”.
China has been known to be strongly opposed to the topic of the decentralised economy proposed by Bitcoin and other altcoins, and this is a way to adopt a similar technology, only to use it against it.
One of the main purposes of developing its own electronic currency is to prevent the need for it’s citizens to adopt a standardised currency like Bitcoin, which—according to authorities—is already under the control of others.
Yet, this still raises an important point in favour of cryptocurrencies: it is proving their efficiency over regular coins.
And, if the line is not blurry enough so as to who comes out on top, China still houses one of the largest cryptocurrencies today: NEO. In fact, NEO is well-known for actually benefitting from China’s movements against other cryptocurrencies, as it lays on a “safe ground”.
A Part Of A Worldwide Trend.
The most important part about this movement is not how it looks to compete against Bitcoin or the fact that it is really a way to strengthen state control.
The most important part about the adoption of blockchain technology on behalf of China is that it translates to one of the largest nations proving the usefulness of this concept. In the end, it is part of a larger trend of countries adopting the blockchain as a part of their functionality, a major step in technological evolution.
A similar move was made earlier this year by Venezuela and its creation of the “Petro” coin. A digital form of money that is meant to increase the control of a government over the financial ecosystem. Regardless, other examples including Japan and Estonia, the later having created an entire government through their KSI Blockchain. Said blockchain has also been adopted by NATO, which means an even larger spreading of this technology around the biggest entities around the globe.