China, a one-time bitcoin capital of the world suddenly turned its back on cryptocurrency Exchanges and ICO operations in its territory in September 2017. Now, the central bank of China has made its intentions of establishing own digital payment system known, in a bid to reclaim its lost blockchain glory.
‘Digital Currency Electronic Payment’ not Bitcoin
The official hinted that the primary objective of DCEP is to make it easier for people to send money in a fast, secure and convenient manner.
Xiaochuan stated that authorities are still deliberating on whether to build DCEP upon blockchain technology or other existing electronic technologies, but the consensus is to establish a national digital payment system.
The proposed digital electronic payment system will solve the issues of financial stability, risk prevention, and consumer protection. In essence, DCEP is positioning itself to be non-volatile digital money.
The PBoC governor, whose term in office will expire shortly, started his long but insightful speech by saying that:
“It may be noted that the People’s Bank began organizing conferences on digital currencies more than three years ago. Then the Central Bank’s Digital Currency Research Institute was established. The most recent action was to organize distributed R&D with the industry to carry out various programs, relying on markets to work together to develop a digital currency.”
The Satoshi Dream
From all indications, there’s little difference between the kind of digital payment system the PBoC is aimed at creating and existing cryptocurrencies like bitcoin.
The outgoing Central Bank chief continued thus:
“A clear purpose is to study the application of digital currency to enable money to achieve a certain technical solution, essentially the pursuit of convenience, rapidity, low cost of the retail payment system, while taking into account security and protection of privacy.”
He also predicts that shortly fiat money may not be king anymore due to the cryptocurrency craze until concluding that “The development of digital currency is the inevitability of technological development. In the future, the scale of banknotes may gradually shrink, even for a while.”
He also noted that the abrupt ban of ICOs was the result of a research that deemed the move necessary in 2017.
“In 2017, the People’s Bank of China organized research projects on digital currency and electronic payments, which were approved by the State Council. This is a research and development plan. The digital currency will go to the testing stage after a certain degree. The central bank has long paid attention to financial technology. This is our overall attitude toward science and technology. “
The official made it categorically clear that the nation supports blockchain technology. However, it thinks the whole research projects need to do more. In referring to the ban placed on ICOs in 2017, the governor explained that the Chinese government needed to take a closer look at the sector overall.
He concluded that “In terms of future supervision, we feel that it is dynamic and depends on the degree of endurance of the technology. It depends on the results of local tests.”
OKCoin to the Rescue
Although the PBoC has said it’s not yet clear what technology it will use in creating DCEP, blockchain remains the most secure for digital currencies and would most likely be their first choice under normal circumstances.
According to a leaked chat between the founder of OKCoin, Star Xu and the Chinese government, the CEO has said he’s willing to collaborate with the authorities.
In a Wechat group chat, Xu informed his staff that he had been in talks with Chinese officials regarding OKCoin’s overseas expansion plan, the outcome of its blockchain research, and development operations.
The CEO also declared that his firm is “prepared to donate it to the country anytime in the future.” Naturally, the leaked conversation has raised huge speculations on Chinese social media.
No one can say for sure what Xu wants to donate to the government since even his subsidiary crypto trading platform OKEx has also been walloped by the tightened oversight of the government.
However, due to the authoritarian nature of the government, the author firmly believes the PBoC will not create an entirely decentralized digital money so that it can retain its authoritarian stronghold.