Blockchain and the cryptocurrency race is the most interesting innovation since the advent of the internet in the 90s. Cryptocurrencies have been around since taking over the financial world.
With the world’s most powerful economies and corporations drafting plans to launch their digital currencies. China and Facebook are leading in this front respectively. On the other hand, Satoshi Nakamoto’s Bitcoin leading the entire battalion of crypto markets.
There had been chances of witnessing the world’s first digital currency in 2019. However, China has pushed the launch date. Global financial enthusiasts are anticipating a 2020 debut of China’s stablecoin. Meanwhile, this very significant launch will also be the basis of a new digital currency/electronics payment system (DCEP).
China’s penetration into a leading supplier of global consumer products threatens several other leading economies with its digital payment system.
For instance exports and imports through China will have to go through the DCEP. A signal that the country is creating an efficient and legal payment system to complement global trade.
It is worth noting the difference between China Digital Currency Electronic Payment (DCEP) and other existing cryptocurrencies. The bitcoin blockchain, for instance, controls the value source of bitcoins through an algorithm. Furthermore, technologists mine bitcoins in a decentralized ledger.
On the other hand is DCEP, a model that the government sanctions and with at least 50 registered patents. All patents relating to the distribution of currency through traditional financial institutions. Features that make DCEP centralized and a striking resemblance with traditional fiat.
Additionally, only the government will have control of the blockchain ledger rather than distributed across the system. DCEP will follow the normal model of paper money.
In fact, the government will integrate into the commercial ecosystem. The Chinese payment system will also effectively reduce initiation constraints due to time lags. According to Wired, the government will not deploy the ledger to mining nodes.
Hence and unlike bitcoin, it will have daily practical usability. Well, the fact that the system will peg the value of the coin to the valuation of Yuan -; the Digital renminbi won’t trade as fractions. Blockchain analysts hope that the system will be easy to use; since daily users anticipate a platform that is no different from existing payment platforms.
Nonetheless, people have questioned China’s move to crack down bitcoin trading. Facebook’s Libra coin has also become a global bone of contention. A situation that reveals that central banks are warming up for the digital currency era;
But still, find other digital currency potentially a threat.
Especially when such digital currencies are out of their control. Or rather when they pose a threat to a nation’s financial security. China cracked down on crypto trading activities back in 2017 when it shut down at least 173 crypto trading platforms.
China feels that the United States has been benefiting from global trade. A former member of the NDRC said:
“When we trade with the Philippines, and we use the regular financial system, both of us convert into dollars. It’s the US who benefits from that trade.”
Launching the DCEP will enable China to effectively navigate its activities without the need for the US dollar.
And just like that, the United States will have to grapple with an autonomous economy toppling it from being the world reserve currency.