Republic of China Might Soon Roll Out Its Fiat Cryptocurrency
Although Chinese officials have been putting up a tough face while dealing with ICO activities, rumours says the Central Bank of China is slowly bracing itself to launch it’s own state-backed cryptocurrency. Background tests of the cryptocurrency is being carried out regularly by digital experts and some big shots are also rooting for the same. The Chinese government is hopeful that this new form of cryptocurrency will put all illegal activities such as hacking and money laundering to rest.
Yao Qian, the director of PBOC, People’s Bank of China last week made the announcement of China completing all the necessary trial and error tests on algorithms which shall form the skeletal structure of the digital currency form. After successfully running test transactions in between commercial and central bank, the experts will now focus on piloting the cryptocurrency in urban regions.
What The New CryptoCurrency Promises To Bring Along ?
This new Chinese cryptocurrency form shall be treated at par with cash and will also be used in commercial bank managed digital wallets. This will aid users in fostering payments directly using the digital currencies. The same is expected to bring down transaction costs as payments can be transferred directly from buyers to sellers. This will also bring along enhanced transparency which serves as the ultimate nemesis of tax evaders. Well this state backed Cryptocurrency may give competition to Bitcoin, NEO which is already existing in the cryptocurrency market is posing a direct competition to Ethereum.
Like Ethereum, NEO also provides a platform to build Smart Contracts and Decentralized Apps (DAPPS). NEO is gaining support of Chinese Government and is therefore often referred as Chinese Ethereum
China has a past history of struggling with unseen money uses mostly channeled through underground banks having extensive networks both within the country and abroad. Using a centrally monitored digital currency can help authorities in tackling such illegalities with renewed zeal. Chinese authorities have already charged Bitcoin with fraudulent activities and its hand in aiding financial crimes. People’s Bank of China adviser Sheng Songcheng revealed last month that Bitcoin adds impetus to tax evasion and money laundering activities. Furthermore, its inherent value have also been targeted by Chinese scholars who feel that cryptocurrency is a product of pure speculation when it is not backed by a state.
Chinese consumers have shown an ever-increasing readiness towards the usage of non-cash modes of payment. Alipay and WeChat usage for making daily payments have crossed $5.5 trillion in 2016 which signifies the growing demand for digital payments along with an urge amongst customers to understand its operation. Pilot tests conducted in Shanghai and Beijing will reveal the actual demand of this currency form for being used in the fiat mode and the level of education that is required to be imparted amongst the general public for empowering them to use the same. Before China, England, Sweden and Canada have already pondered over the thought of adopting their own digital currencies. In 2015, Ecuador issued its state-backed digital currency termed as “Sistema de Din ero Electrónico.”
In spite of its dynamic functionality surpassing common currency forms, such cryptocurrencies are highly vulnerable to hacking. Decentralized Blockchain digital tokens like Bitcoin and Ethereum have also reported infamous cases of hacking in the past. $32.6 million Ethereum was hacked in July from Parity’s digital wallet software sending massive shockwaves through Ethereum market. Mt. Gox, a bigshot Bitcoin exchange was defrauded of $460 million starting from 2011. Thus it is imperative for Chinese officials to provide certain form of deposit insurance or guarantee since these currency forms shall not maintain any traditional bank account.
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