This is one of those news items that tends to be overlooked by the media amid the so-called silly season, but which will have major repercussions: the People’s Bank of China has announced that after five years in development, it is ready to launch its digital currency, although no date has yet been set.
The country that has contributed most toward the development of cryptocurrencies, at least in quantitative terms, and that which has tried hardest to control them through successive prohibitions, is now about to do what very few other countries have: rather than continuing to wait and see, it has launched his own project, under centralized control like everything else in China, and aims to take advantage of the undoubted advantages of cryptocurrencies by launching its own. This is not a change of opinion, but a significantly more innovative reinterpretation of the cryptocurrency project than other countries.
The structure of China’s virtual currency will probably have little to do with the cryptocurrencies we’ve known until now: it will be supervised at two levels, with the People’s Bank of China above and the country’s commercial banks below in order to manage China’s vast economy, rather than depending solely on blockchain, which is too slow and inefficient to manage such a huge volume of transactions. Ostensibly, the idea is to generate a stable currency, a modern vehicle for transactions with all the advantages of a cryptocurrency and avoiding the instability and fluctuations cryptocurrencies have traditionally been subject to. What China also wants to do is provide total traceability for all economic transactions, thus avoiding the problems associated with cash, such as crime, submerged economy… all very much in line with Beijing’s policy of rigid population control.
This approach will likely disappoint cryptocurrency enthusiasts but it could offer a model for developed nations that do not want to be associated with the antics of failed states like Venezuela and its petro. China’s move could be a radical rethink of the role of money in its its economy, offering solutions for its challenges. Cryptocurrencies are going to play a major role in the coming years, and China has decided to be part of that future, in a big way. This is a long way from the early ideals of the cryptocurrency development community, heavily influenced as it is by practical considerations and the interests of one of the world’s largest economies, but will nevertheless be watched closely.
The cryptocurrency has come of age.
This post was previously published on Enrique Dans and is republished here with permission from the author.
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