- China has been on a strong push in order to become the first nation to implement a central bank digital currency (CBDC).
- The new array of patents clearly indicates that the People’s Bank is hard at work to deploy the currency within 2020, as is the rumored release timeline.
- Nemo Qin from eToro believes that CBDCs are fundamentally catering to a different audience.
China has been on a strong push in order to become the first nation to implement a central bank digital currency (CBDC). Their efforts are clearly visible as the People’s Bank of China filed more than 80 patents on 13 February alone.
Which mentions the circulation and supply of their CBDC. Some additional points that were recognized on the patents were interbank transactions, and how this new digital yuan would tie into the existing retail bank accounts for the general public.
The new array of patents clearly indicates that the People’s Bank is hard at work to deploy the currency within 2020, as is the rumored release timeline. Although the country has been generally quiet on the issue, these new patents show that they are working away at the digital currency electronic payment (DCEP) system to complement their upcoming CBDC.
One cryptocurrency analyst, Nemo Qin from eToro, believes that CBDCs are fundamentally catering to a different audience. It built with a different aim at its core compared to cryptocurrencies.
They are meant to be centralized by the banks, controlled by the government, and therefore they are to be an extension of fiat currencies in a digital format. This shouldn’t make them a direct risk to cryptocurrencies anytime in the near future as per Qin.
The digital yuan that China is working won’t have the usual properties of cryptocurrencies such as a decentralized ecosystem, a mining-based circulation, trading on exchanges, etc. making it a very different form of a currency compared to crypto.
China has been very incessant in harnessing blockchain technology, and the cryptocurrency sector itself finds a lot of its bases in China. Some of the largest mining pools for large cryptocurrencies exist in China, and the President of China, Xi Jinping himself, has made positive comments about the country, deciding to integrate blockchain technology more into their economy.
China’s push into CBDCs has also inspired other countries to follow, with multiple banks in Europe forming a consortium to investigate into CBDCs, countries in the Middle East, and Asia looking into whether CBDCs will suit their economies.
Qin expects more central banks to step a foot into the CBDC market as it gains more traction, and soon investments into CBDC development and blockchain technology from governments can be expected to pour in.