China to soon launch its own digital currency
Earlier this year, China was taking significant steps towards banning all cryptocurrency mining activities, as the country has been constantly trying to tighten the grip over unregulated exchanges. Many a time, the value of Bitcoin fluctuated based on news and rumors coming from China, and it looked like all major cryptocoins were tightly linked to the Chinese exchanges with the largest trade volumes across the globe. While China has not outright banned crypto-exchanges, word on the street is that the Chinese government is finally realizing the potential of blockchain-based currencies and is almost ready to introduce a national digital token to counter the unforeseeable effects of Facebook’s Libra.
According to WCCFTech and reports coming from Forbes, China has not yet announced an official release schedule for its digital currency, yet the government already confirmed that it is looking to adopt a two-tiered launch strategy. In this respect, the People’s Bank of China is supposed to issue the currency and distribute it to seven financial institutions including the top Chinese banks, fin tech companies like Alibaba and Tencent, plus the association of Chinese banks known as Union Pay. In turn, all the institutions will ensure that the digital tokens will get in the hands of the masses in a timely manner.
The reports also mention that the new digital currency will not be solely based on blockchain architecture and will retain some features from current electronic payment platforms. This will enable process speeds of 300,000 transactions per second, whereas Facebook’s Libra is said to handle only 1,000 transactions per second. Additionally, the Chinese digital currency will not require an Internet connection to eliminate counter-party risks, and will be compatible with mobile payment platforms like WeChat and Alipay.
This move should allow China to reinforce the value of the Yuan in an attempt to counter the influence of the U.S. Dollar that may see increased gains with the launch of Facebook’s Libra. Moreover, with China recognizing the advantages of regulated digital currencies and pushing for a nation-wide adoption, all the major cryptocoins like Bitcoin and Litecoin could see a considerable price boost.