Will China Introduce a National Cryptocurrency to Displace Bitcoin’s Dominance?
China could soon replace Bitcoin (BTC) and other virtual currencies with a national digital asset developed by the People’s Bank of China. This is clearly something that goes against the ideas that Satoshi Nakamoto had when s/he created Bitcoin. Indeed, most of the crypto space today is not in favour of centralized and government-backed virtual currencies.
According to Bloomberg, the People’s Bank of China, which works as the country’s central bank, seems to be searching for the way to introduce a national cryptocurrency. With this digital asset, the government could have more control over its financial system. China is a centralized country that controls its citizens and is at all-times trying not to lose the power it has over its nationals.
With a virtual currency, it might be possible for the government to have more control over its financial system. It would also enhance the PBOC’s ability to tackle money laundering activities and tax fraud. Additionally, with the information provided by transactions, the central bank would have the possibility to understand how individuals spend their funds and how they behave.
With this virtual currency, the government will also have the possibility to replace cash. This is what the PBOC Deputy Governor Fan Yifei wrote earlier this year in an article, as Bloomberg mentions. Furthermore, the central bank has also registered several patents that allow analysts to believe that users would use a wallet to process payments and transactions.
As per the report released by Bloomberg, the project was started by the former governor of China’s central bank, Zhou Xiaochuan. Back in March, he retired and a new governor took his place. Yi Gang, who apparently supports, or at least ‘likes’ bitcoin, is currently PBOC’s governor.
It was clear that Zhou Xiaochuan did not like virtual currencies. About them he mentioned:
“We don’t like speculative cryptocurrency products since it is not a good thing to give people, an illusion of getting rich overnight.”
Since 2016, the bank has registered around 78 patents related to virtual currencies. Although the currency could be introduced in a relatively short period of time, the expansion in the market will be gradual.
At the same time, according to a patent filed by the bank,banks will have to gather information about borrowers and interest rates before they are able to transfer these funds. This would also help blacklist individuals and companies from taking loans. Bloomberg also says that there are some critics that believe that the technology could be used to punish dissidents of the regime.
Currently, Venezuela is the only country in the world that has decided to create a local virtual currency. The so-called Petro is currently the only government-backed digital asset around the world. Other countries such as Canada, Ukraine, the United Kingdom, Norway and Sweden have also been analysing positive and negative things about issuing a digital currency.