China has always been hard on the decisions related to cryptocurrencies and Bitcoin and even they pinned the mining of bitcoin as wasteful. China later went easy with the ICO, bitcoin and cryptocurrency mining, but still going easy with the virtual currency is not enough for them. The country’s government has started to work on launching their cryptocurrency.
As per the reports in the media, the People’s Bank of China is working for issuing their very own virtual currency. On the other hand, the deputy director of PBOC’s, Mu Changchun has stated they are getting very close to issuing the digital currency in China.
The official didn’t provide much information related to the time of the launch of the cryptocurrency. While he stated that the new digital currency is the total replacement of the fiat or cash currency, which is currently using by the people and the currency would support the circulation of yuan.
The deputy director of PBCO stated that their digital currencies will not only depend on blockchain technology like other cryptocurrencies because it might not be able to handle the enormous transactions across China. For using the digital currencies the users have to download a mobile wallet and exchange the yuan for the virtual token and then only they will able to transact and receive payment with digital currency. The Central Bank in China will keep a record of every single transaction made.
The rumors are that the People’s Bank of China has been associating working with Sweden’s Central Bank for five years to issue their cryptocurrency is market, where Sweden’s Central Bank is also researching for the same. This movement of China and Sweden is due to the government around the globe are worried because of the popularity of cryptocurrencies and its issuing by Facebook. Even President Donald Trump has expressed his concerned regarding private companies are now issuing their currencies.
Even by this move of the Chinese government, they are trying to restrict the growing power of cryptocurrency and not trying to embrace it.
The dominance of Crypto and Bitcoin
The motive of the government of China was clear they want to launch a rival for the cryptocurrencies and especially for Bitcoin. This step is taken concerning the reports that China has noticed the massive transactions of Bitcoin and Tether (USDT) in the country. Diar, a crypto research firm said that around 62% of USDT on-chain volume has come through the transaction in the second quarter of 2019. The Diar’s report stated,
“Data provided to Diar by blockchain analysis firm Chainalysis highlights the magnitude of Chinese Tether demand with over $16Bn received by exchanges based in that market in 2018. This year the number has already surpassed an outstanding $10Bn, setting the stage for the biggest year yet. 2019 to date flows into exchanges catering primarily for Chinese traders beat the $7Bn of all the transactional value for 2017.”
In China, the popularity of the Bitcoin more as a store of value and not a regular payment tool. This is due to the virtual currency system such as Alipay and WeChat have already rooted there and they are used to transact hundreds of millions by millions of users. However, even their cryptocurrency would not make much effect on Bitcoin.
On the other hand, there is still doubt whether Bitcoin is a safe option or not. As the value of Bitcoin slightly decreased in August and the volume of the currency is also decreased, then Bitcoin premium in the important market such as South Korea and China also decreased.
South Korea is the third biggest volume market for Bitcoin after the U.S. and Japan and there Bitcoin is trading even lower than 1% when compared to the international average value. With the increasing politics and conflicts around the world, the experts are expecting that the traditional investment option such as gold will be the shining performer, but still, Bitcoin can also prove its strength.