The cryptocurrency industry is causing some subtle competitors to emerge. At least, such an impression can be formed after the recent speech of the representative of the People’s Bank of China.
He stated that the growing popularity of Bitcoin has forced the global community to pay more attention to the digital yuan. For several years now, China has been actively developing its own CBDC, the central bank’s digital currency. Moreover, its principles are completely opposite to the foundations of the cryptosphere.
Recall that the topic of digital currencies from central banks is actively being considered by the governments of many countries. In general, they should become a new form of money that will essentially replace cash. There may be exceptions, though. As we learned at the end of 2020, the digital ruble will only be an addition to existing cash and non-cash payments within the country.
At the same time, the prospects for launching such projects are unclear. As it became known on Friday, the European Central Bank is still going to study the prospects for the digital euro, and the preparation of the project will most likely take about four years. These are the terms set by the head of the ECB Christine Lagarde.
And since China has already tested the digital yuan, this country is tentatively leading in the development of a project of this scale. At the same time, a full-fledged release has not yet taken place.
What’s wrong with the digital yuan?
The basic concepts of decentralization and autonomy are being replaced by centralization and oversight in an attempt by the government to simplify control over cash flows.
The digital yuan is expected to become the centerpiece of China’s smart city ambitions, pushing entire cities to global cashless models in the coming years. However, the Central Bank of China believes that the «very strong» interest in the digital yuan is the result of the recent rise in the price of Bitcoin to new all-time highs. And this is happening even though cryptocurrency is still not well received by the Chinese government.
China accelerates towards cashless payments
Wang Xin, director of the People’s Bank of China’s research bureau, said interest in the digital yuan was driven in part by the desire of other countries to follow suit, as well as the rise in the price of BTC. Here is his remark, which highlights the position of the country’s leadership. The quote is from Cointelegraph.
On the one hand, this is due to the fact that more and more central banks in the world are involved in the development of domestic digital currencies. On the other hand, this interest could also be associated with a significant increase in the price of Bitcoin.
That is, a representative of the country’s main bank says that the increase in Bitcoin’s growth has fueled the interest of citizens in the digital project of money from the government. And it sounds strange, since these assets are completely different. As we have already noted, the first cryptocurrency is decentralized, that is, the network participants themselves, and not the leaderships of the countries, are engaged in its release and distribution. In addition, the cost of the digital yuan will be tied to the regular currency, that is, there will be no opportunity to make money on a new project.
Therefore, it is rather difficult to understand the connection in this statement. Here it seems that it was made to improve the reputation of the digital yuan, which is «helped» by what is happening in almost any area.
However, China has conducted numerous pilot trials of the digital yuan over the past few months, with experiments extending to biometric hardware wallets, street ATMs, national lottery draws, and more. In this sense, the sharp rise in popularity of the crypto market really plays into the hands of the digital yuan now. It is possible that if CNBC becomes a new trend in global finance in the future, China will benefit greatly from the current circumstances.
We believe that there is no connection between the rise in the price of Bitcoin and the interest of citizens in the digital yuan. However, this position is beneficial for the government – that’s why it is voiced. In reality, it is obvious that the proliferation of full-fledged cryptocurrencies makes citizens only doubt about centralized projects that are regulated from above. And this is exactly what is happening now.