China Says It's Ready To Roll Out Its Own Bitcoin After 5 Years
It could have taken China longer to embrace the mass appeal of digital currency, but it's not one to be left behind and, in fact, is on the thick of things right now to launch its own cryptocurrency that is "said to be ready", according to the People's Bank of China.
Chinese crypto players have been weighing the pros and cons of this latest virtual asset that saw finance experts and lawmakers locking horns as to its authenticity. Its entry is something that could reshape the country's financial ecosystem after five years in the works.
According to PBOC deputy director of payment and settlement Changchun Mu, during Saturday's announcement, the new cryptosystem will use a complex 2-Tier Split framework, with the Chinese central bank at the core (upper level), and commercial banks below (lower level), purportedly to cope with the massive size of the country's population and economy.
What makes China's virtual currency distinct is that it will not operate or function under the Blockchain that forms the central nerve of all electronic currencies.
Blockchain, Changcum pointed out, does not have the capacity to deliver the throughput required for retail usage. When this new currency will be fully operational has yet to be formally announced.
China's participation in the bitcoin bandwagon has taken many crypto advocates by surprise, given its impartiality on virtual money. In fact, the government has considered outlawing crypto mining, but some observers believe it was just a ploy for regulators to tighten their grip on cryptocurrencies.
Having their own version of Bitcoin might help the government minimize the massive popularity of digital assets outside of their influence. China does seem bent on launching its own digital money very soon.
The country's economic regulators have spent a great deal of time trying to minimize the impact foreign tech has had on their economy, and creating their own bitcoin could be their best move.
Meanwhile, the PBOC and concerned finance agencies know the challenges they are facing and putting their trust in a new crypto infrastructure will not be a walk in the park. If there's one individual who should be upbeat about Saturday's disclosure, that should be Huawei chief executive officer Ren Zhengfei.
Zhengfei recently told L'Economia that he wanted the Chinese government to roll out its own digital asset so it would not have to wait for other cryptos, like Facebook's Libra, that is currently under strict scrutiny by US regulators.