China promises anonymity despite transparency of digital currency
The government of China has debunked conspiracies about its upcoming central bank digital currency, the anonymity of its citizens and the country’s surveillance program. According to government officials users will have guaranteed ‘controllable anonymity’, as long as they are not engaging in anything illegal. The head of the digital currency research institute at the Chinese central bank clarified this in a recent statement to Reuters.
Mu Changchun, head of the Chinese central bank, underlined that the country will not follow the money flow of every citizen. “We will give those people who demand it anonymity in their transactions”, he said at a conference in Singapore as reported by Reuters. With these words he probably referred to the ability to still use paper money and good ol’ coins.
Blockchain is the driving technology behind the recently revealed Digital Currency Electronic Payment (DCEP). Every Chinese citizen will get a digital wallet to use the national digital currency. The government has the potential to track all transactions. Firstly because every transaction takes place on the blockchain, and secondly because wallets are tied to individuals.
The central bank digital currency of China, or DCEP, is the country’s answer to the dominance of AliPay and WePay. This answer is needed because billion dollar companies Alibaba Group and Tencent basically control all financial traffic in the country. They own these two payment processors. With the introduction of a digital yuan the government wants to take control back from these two commercial institutes. The digital currency of China will probably not bring complete anonymity, but consumers can still participate in society with cash. However, most people already rely on digital payments and cash is hardly used at all.
Launch of China’s state cryptocurrency
There’s no exact date for the launch of China’s state-owned cryptocurrency just yet. However, officials have already stated that most of the work has already been done. The country has been working on the project for almost five years. Chinese citizens are probably able to use the central bank digital currency early into 2020. To underline these assumptions, tech manufacturer Huawei made a deal with the People’s Bank of China.
China has had a turbulent relationship with blockchain and cryptocurrencies over the past few years. For example, every time something happened in China, it reflected into the pricing of bitcoin and other cryptocurrencies. First they banned exchanges and later labeled mining to be something that should not be supported.
However, the country made a complete U-turn last month. President Xi Jinping urged government officials and companies to embrace blockchain technology. In addition the country is throwing 2 billion dollars into all kinds of blockchain investments. On top of that they’ve approved a new law for cryptography which will standardize the development somewhat. The cherry on the cake is that the government no longer thinks that cryptocurrency mining is unfavorable.
China’s blockchain-powered Orwellian state
Anonymity in China is more like an oxymoron. The country is incorporating blockchain technology into many facets of daily life. One of them is the country’s surveillance system, which uses thousand of cameras to directly recognize people on the street. The country is even working on a Black Mirror-esque social credit system which denies people access to certain services based on their score.
Blockchain databases owned by the government will be connected, and people with lower social scores might for example not get loans at the bank. In addition a lower social scores could influence job interviews or access to public services. This social credit system can have life changing impact on Chinese citizens, but maybe we are overreacting here. Let’s first launch that digital currency and see how far Big Brother will reach out into the lives of its citizens.
Originally published at NEDEROB.