Úno 17

Virtual Currency Issued By PBOC Will Not Use Blockchain Technology

Source: bitcoin

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While there seems to be a lot of doubt regarding the future of cash right now, the governor of China’s central bank feels virtual currency will eventually replace this archaic method of transferring value. At the same time, PBOC governor Zhou Xiaochuan was quick to add how the Chinese government will regulate all virtual currencies used as legal tender, indicating there are no plans to embrace Bitcoin by any means.

Also read: Tokken Puts the Legal Marijuana Industry on the Immutable Bitcoin Blockchain

People’s Bank of China Believes In Virtual Currency

To many people, it doesn’t come as a surprise to hear the People’s Bank of China reinforced their earlier statement regarding virtual currency, as the institution has announced plans to launch their own currency shortly.  PBOC governor Zhou Xiaochuan mentioned how currencies evolve as new technologies and economies develop. Cash is very low-tech, and it only seems natural consumers will look for digital alternatives at some point.

Replacing paper money will take some time, though, as a large part of the success of virtual currency hinges on how it will operate. Bitcoin, a very popular virtual currency, is not regulated by banks or governments. Some people see this as a weakness while most of its community members feel this is a core strength of Bitcoin. Central banks will want to control the virtual currency they see as legal tender, though, pushing Bitcoin to the bottom of the list for the PBOC.

When the people’s Bank of China decides to issue their own virtual currency, a significant portion of the development efforts will be focused on security and convenience. At the same time time, a balance must be found between preventing illegal activities and respecting user privacy. Virtual currency can offer pseudonymity to its users, which protects privacy, but also makes it harder to crack down on illicit activities.

PBOC Governor Zhou Xiaochuan stated:

“Since the digital currency will be legal tender, it must be issued and controlled by the central bank, with the issuance, circulation and transaction processes following the same management principles as traditional currencies.”

At the time of publication, the PBOC did not mention a concrete timeline for the release of their own virtual currency. Given the high population and large economy of China, it will take anywhere from months to several years until the new currency is launched. However, it would not replace cash from day one, but rather co-exist for a while until the time has come to remove cash from the economy.

No Mention of Bitcoin At All

As was to be expected, the People’s Bank of China shows absolutely no interest in Bitcoin at all. Or to be more precise, there are no plans to use the popular virtual currency to replace cash in China by any means. But at the same time, officials are keeping an eye on how Bitcoin evolves, as they can use its concept and development progress for their own virtual currency in the future.

Additionally, PBOC has no plans to use the blockchain as we know it either. According to Xiaochuan, the current technology requires far too many resources – such as computational power – and is incapable of handling the transaction volume needed to make it an efficient replacement for China’s economy. Other technological solutions are being researched, and cooperation with various industries will bare an answer in the months and years to come.

What are your thoughts on the plans of PBOC and their own virtual currency? Let us know in the comments below!

Source; BTCC

Images courtesy of PBOC, Shutterstock

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Virtual Currency Issued By PBOC Will Not Use Blockchain Technology

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Úno 15

PBOC Governor Speaks About Digital Currencies

Source: bitcoin

PBOC Governor Speaks About Digital Currencies

The People’s Bank of China (PBOC) Governor Zhou Xiaochuan was just recently interviewed and had quite a bit to say concerning digital currency. The central bank official spoke of capital outflow, Bitcoin, and centralized digital yuan. Xiaochuan expressed a lot of knowledge on the subject, and he says the PBOC has been researching digital currency for quite some time now. Xiaochuan states in the written transcript:

Also read: Jamie Dimon: Bitcoin Doomed While Blockchain Is for Real

“The PBOC has studied digital currencies for a long time. History shows that currency has evolved abreast of technological advances and development of economic activities.— From the central bank’s perspective, a digital currency should be designed in a way that can best protect people’s privacy, but we also need to pay attention to social security and social order. We need to keep some necessary investigative instruments readily available to deal with criminal activities. A balance needs to be struck between protecting privacy and cracking down on illegal activities. Different preferences between these two motives will lead to different technological orientations for digital currency.” — Zhou Xiaochuan, PBOC Governor

PBOC Governor’s Opinions of Digital Currency 

The governor of the bank, Xiaochuan gave strong opinions regarding the subject of permissionless and permissioned digital currencies. He believes the central bank adds a framework of security, social order, and regulatory policy. All of which the central banker feels would be a better architecture for digital currencies. Xiaochuan states, “We think, therefore, as a legal tender, digital currency must be issued by the central bank. The issuance, circulation and transaction of digital currency will follow the same management principles of traditional currency.” However when it comes to the creation of a centralized digital yuan, the governor says they have no roadmap. He believes it’s going to take some time to issue a technology and for it to gain some adoption. Cash will coexist with virtual money for quite some time Xiaochuan says, but the cost associated with cash will rise.

“For instance, banks do not charge any fees for counting large amounts of coins now, but in the future they may charge their clients for the service. With the transaction costs of paper money rising, people will be motivated to opt more for digital money. But digital currency and cash will coexist for a long time.” — Zhou Xiaochuan, PBOC Governor

The PBOC representative then goes into the subjects of monetary policy with cryptocurrencies and the 51% attack topic with Bitcoin. He believes that the beginning stages of regulatory improvements will take time with digital currency adoption and one issued by the central bank will significantly improve. Xiaochuan explains, “The security and efficiency of issuing and withdrawing digital currency will be significantly improved in the end.” With problems like the 51% attack, Xiaochuan says that’s a Bitcoin problem and would have a hard time happening in a centralized atmosphere. The governor considers the theory a “hotly debated” topic and a digital currency created by the PBOC would differ immediately from its inception.

“As for the hotly debated “51-percent attack,” it is more about bitcoins. Bitcoins do not involve a central bank. For a digital currency controlled by the central bank, a combination of technological measures, institutional design as well as laws and regulations will be applied to ensure the security of its operation system. This differs from bitcoins at the very start.” — Zhou Xiaochuan, PBOC Governor

The interview revealed that the PBOC and the executives working there have a great understanding of what’s happening in the cryptocurrency and blockchain world. Central banks are very aware of the disruption of the current money system as we speak, including the vast number of smaller legacy institutions operating under them. Time will tell what the PBOC will do with the creation of a digital yuan. Will it be a cryptocurrency like Bitcoin? Probably not. 

What do you think of the People Bank of China Governor’s statements? Let us know in the comments below.


Images courtesy of Shutterstock, Pixbay, and Wiki commons

 

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PBOC Governor Speaks About Digital Currencies

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