China’s blockchain-backed digital currency

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China is going to introduce its official digital currency.

As information says, it will be a fiat currency – a digital version of RMB(人民币). Renminbi is a Chinese national currency with legal statutes, new – virtual one will exist on similar terms.

How was it revealed? By recruitment notice, which divulged that People’s Bank of China is forming the prototypes connected with blockchain-backed digital currency. They were looking for six people to design and develop soft and hardware systems, as also platforms for digital money. At that time, the government also announced to reinforce R&D actions for a state-backed digital currency.

Currently, we know that distributed ledger system will be a base system for transactions and settlements. Yao Qian, who was a deputy director of PBoC’s technology department, will be also a director of a new institute- Digital Currency Institute. It is placed in a Beijing, near to financial district in Desheng National Center. What is more, this building is also a location of subsidiaries of China Banknote Printing and Minting Corporation – these state-owned corporations as the names say – produce an RMB coins and print RMB banknotes.

Chinese digital currency already has the algorithms. Specialist of the central bank of China finished trail runs and designed a prototype which can regulate the supply. The goal of this prototype is to make PBoC the only policymakers that will govern the value and regulate  a currency.

What is the Chinese government’s direction?

Huang Zhen, a researcher at Central University of Finance and Economics, said it is because China wants to “continue the development of global digital finance as soon as possible into the era of globalization.’’ Secondly, the advantages of this project are to cut the risk of frauding money and laundering them. Then, digitalization of transaction can make them more transparent.

Despite the fact that China banned a Bitcoin and closed the exchanges we knew that it is not the end of Chinese’s adventure with a digital world. In this country, people almost do not use cash, paying everywhere by Wechat wallet, which is a digital wallet for RMB. The world is going to the era of digitalization, and China is an excellent example of this thesis.

They used blockchain to transfer their currency into a digital world, so the question is how similar it will be comparing with others cryptocurrencies?

We don’t know the exact time of implementation, but specialists claims that China will be one of the first (after Ecuador, Tunisia, and Senegal) countries with a digital fiat currency.

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