In what can be music to the ears of traders and investors of cryptocurrencies like Bitcoin, ETH, XRP and LTC, there are reports that the People’s Bank of China (PBC) is planning to introduce its own digital currency.
According to some published articles, the PBC has already applied for 74 patents involved with digital currencies to the National Intellectual Property Administration, in order to speed up the development of a legal digital currency.
The somersault by the premier Chinsese bank will definitely come as a big surprising to many as it is hardly two years since the country banned cryptocurrencies trading. It may be recalled here that in the year 2017, China had banned Initial Coin Offerings (ICOs), and stopped direct Bitcoin-yuan trading, crushing cryptocurrency markets.
Not surprisingly, cryptocurrency experts see the Chinese Bank’s efforts to introduce its own digital currency as a recognition of the many advantages cryptocurrencies have over traditional currencies. They are of the view that the fact that China’s PBC is warming up to digital currencies in itself is a good news for major cryptocurrencies like BTC,ETH, XRP, and LTC.
According to experts, China’s foray into digitizing the yuan is a key milestone in changing how money is represented, stored, and moved. Global, sovereign level adoption of digitized assets is a testament to how transformative and impactful decentralized ledger networks have become. Experts also see Chinese Bank’s move as a source of further financial innovation. Coupled with the fact that China has completely adopted digital payment technologies, one can hope that
a digital currency issued by the Bank will further augment China’s ability to build many new financial primitives, experts say.
But, some other experts point to the centralized nature of PBC’ proposed currency as a limiting factor. The proposed approach is still a centralized system, run by a national government. As a result, this wouldn’t be considered a decentralized cryptocurrency and in the People’s Bank of China’s words, ‘It is to protect our monetary sovereignty’ – a pseudonym for control over currency, they say.
Meanwhile, some experts argue that the new Chinese cryptocurrency will be competing with China’s other digital currency, and it may not compete with other major cryptocurrencies in the world. This move will likely disrupt other digital currencies in China, such as WeChat and Alipay. While other governments may take note and follow suit, this currency doesn’t appear to be cross-border and is centrally controlled, which makes it a different proposition to cryptocurrency altogether, experts say.