Place/Date: - April 6th, 2021 at 12:08 pm UTC · 4 min read
Source: Central Bank of China
More and more companies that belong to the traditional sector of the economy began to use cryptocurrency. They are also actively involved in the development of digital coins for internal mutual settlements. One of the pioneers of this technological race is the bank JPMorgan, which launched its own blockchain network for instant payments on February 15, 2919. Already 2 weeks after this happened, the Swiss Dukascopy Bank began its activities and issued digital tokens of the ERC-20 standard, and on the first day of spring a stablecoin pegged to the Japanese yen was issued by one of the financial giants of the Land of the Rising Sun Mizuho Financial Group. In the wake of this popularity, the social networks Vkontakte and Facebook decided to take part in this, and after a while the Central Bank of China announced the creation of its own cryptocurrency.
The director of the payments department believes that in the near future, digital currencies will completely replace paper money. The leadership of the Central Bank of the People’s Republic of China is confident that the release of the stablecoin CBDC is the position of the yuan in the global financial system. It should be noted that it was the Chinese authorities who criticized the Libra project the loudest and were ready to take the toughest measures against the new payment system. It would seem that Facebook is already officially banned in China, and despite the possibility of bypassing the blocking, this social network is not very popular there. However, the discontent of the Chinese authorities is quite simply explained against the backdrop of upcoming events. The state does not want to tolerate competition, therefore it is taking desperate steps to combat it. So what will the first cryptocurrency from the state look like?
This cryptocurrency will be completely controlled by the state, so there will be no hints of decentralization.
Also, the Chinese authorities offer their own solution to the problem of technology scalability. To do this, they will use only a partial principle of the distributed ledger system. This is due to the fact that at the moment there is a need for a much higher speed of processing customer requests. Especially considering the enormous scale of implementation. However, many other ways to speed up the cryptocurrency network are being considered.
At the same time, it is worth noting that the cryptocurrency that China is going to create will be significantly different from the world’s examples of decentralized assets. The differences will lie in the structure of the network and its idea. There is no specific information about the Chinese model and product yet, but at the moment more than 50 patents have already been registered, on the basis of which the first conclusions can be drawn.
This implies the development of a two-tier crypto-yuan issuance system. First, with the help of the state regulator, digital coins will be created for commercial banks, through which they will get to individuals. Thanks to such a system, it is planned to support demand from the population, as well as to strengthen the national currency.
A special electronic wallet was also created for storing currency, which can be used only after identity verification. All transactions will be monitored at the bank where the account was opened. Also, the Chinese government plans to implement and implement a system for tracking the movements of the state cryptocurrency, thanks to which it will be possible to track money even after making a huge number of transfers.
This approach allows you to implement all the features of the blockchain that are beneficial for the state, including cryptographic data protection and transparency in the network. At the same time, the main problem is completely neutralized – complete anonymity on the network. China is also developing a scheme for using this technology outside the state.
However, if all world countries get carried away with the creation of a centralized system with a blockchain architecture, then there is a huge risk of the onset of the era of totalitarianism. Cryptocurrency will become an incredible way to control and influence unwanted citizens, as well as become an instrument of pressure and influence in the international arena.
States are forced to accelerate their development processes, given the pace of development of private business projects. It is too early to panic at the moment. At the moment, the European Union or the United States have not announced such an interest, which means there is no reason for panic.