The People’s Bank of China released a statement on Sunday which points out, among many other things, that the country’s digital currency project is “progressing smoothly.”
Judging from a computer-generated translation of the text, the bank primarily sees use cases for dealing with large cash sums as well as micropayments from the treasury.
Micropayments for All
The snippet reads as follows, according to Google Translate:
The development of fiat digital currencies is progressing smoothly. Further standardize the management of large amounts of cash. Optimize the state treasury withdrawal process to ensure that the tax reduction policy dividends are implemented in small and micro enterprises.
The report comes after five years of research into distributed ledger technologies. As we previously reported, China currently has no interest in building a “China Coin.” Instead, the country has taken a crackdown approach to regular cryptocurrencies, and hopes to build a distributed ledger version of its Yuan in an effort to make crypto obsolete.
The view that state actors need only service all the needs that cryptocurrency does is flawed. It leaves out the obvious benefit of cryptocurrency: no one can take it from you, which will presumably not be the case in China’s e-Yuan, Sweden’s e-Kroner, or other digital versions of fiat currencies. In fact, from the issuer’s standpoint, one benefit will be an enhanced ability to seize assets.
State Crypto? No Such Thing
While many have celebrated government interest in distributed ledger technologies, many others have pointed out that things like Facebook Libra and the prospective digital reminbi, which enable a centralized authority to censor and reverse transactions, are simply not cryptocurrencies.
A cryptocurrency is defined by important elements. The first is whether or not the thing is “decentralized,” meaning not only that the network is distributed over a wide topography, but also that anyone can become a participant.
The second part of that standard pushes into another standard: censorship-resistance, which means a government or other authority has no ability to meddle with transactions.
A few other technical aspects play into the definition of a cryptocurrency, which, while subjective, often discounts some projects like EOS, which has a process for reversing transactions called an “arbitration court.”
China once played a massive role in crypto markets. For years, it seemed like the PBOC governor could roll out of bed, whisper a rumor to an underling, and Bitcoin markets would respond wildly. Chinese policy on Bitcoin was formerly very important to the Bitcoin mining industry, parts of which have been disrupted by the Chinese government.
However, since 2017, when Bitcoin first surged to $10,000 and interest in Bitcoin mining jumped to an all-time high, Bitcoin mining has been more spread throughout the globe.
China remains home to the largest Bitcoin mining company in the world, Bitmain.