China’s State Backed Cryptocurrency and the Future of Money
Many attribute the rapid spike in the price of Bitcoin prices in 2016-17 to Chinese citizens either using the currency to make international investments or to store their savings in a commodity whose value was going up. This activity helped to make Bitcoin a household name – but it also brought cryptocurrencies to government attention and generated large losses after the price of Bitcoin collapsed. Today, cryptocurrency trading is completely prohibited in China, as are ICOs.
More than 1000 years ago, China’s Song Dynasty first introduced the world to paper money. It is likely that they will lead the next revolution towards the true digitalisation of finance. Perhaps the announcement of Facebook’s Libra, and the immediate impact this has had on regulatory bodies across the world, has encouraged China to push forward on their own state-based cryptocurrency. The People’s Bank of China’s research institution was set up in 2017 with the aim of accelerating efforts. Director of the PBOC research bureau, Wang Xi, recently announced that PBOC is making accelerating the development of a state-issued coin.
Tricky for Nakamoto’s followers to swallow. That cryptocurrencies may be brought into mainstream use by two of the most powerful centralised institutions in the world – Facebook and the People’s Bank of China – does not sit well with the original philosophy of creating a decentralised system of value free from intervention of establishment.
Find out more about attitudes towards cryptocurrency regulation around the world from our white paper which you can download here.