What will happen to Bitcoin and Mining in China? 🤔
In April of this year, for the first time in history, China launched its own cryptocurrency — the digital yuan. It would interesting to compare opportunities and obstacles facing the crypto mining industry. In starting a discussion with respects to this development, an assessment would have to be made on the influence of the crypto yuan and its effects on the mining sector as a whole.
In October 2019, President Xi Jinping of China announced that the development of blockchain technology is one of the state’s priorities. The world has seen an accelerated growth and expansion this market area. The chinese crypto yuan is now a leader in digital cryptocurrency.
In April 2020, the first version of the RMB application came online. According to preliminary data, a white list of clients were one of the first in line test the application. This list included the Agricultural Bank of China (Ranking 7th worldwide in gross revenue) in four pilot project districts of Shenzhen, Xingang, Chengdu and Suzhou.
Samples of the earlier versions on the network show several basic functions. The usability interface itself, is in many ways similar to applications of alternative Chinese payment method platforms, e.g. Alipay and WeChat Pay. According to various statements by officials, it is far more simpler to understand the various features and functions of cryptocurrency.
In 2014, Xiaochuan Zhou, Governor of the People’s Bank of China, established a state funded — Digital Currency Research Institute. The study was conducted to assess the potential uses of the application and how it appertains to improvements of the central bank. Over a span of six years, numerous research centers have surfaced which has resulted in the introduction of the digital yuan.
Digital Currency Electronic Payment (DCEP) was the Chinese states response to issuance of digital currency by the central bank.
The four largest banks (CCB, ICBC, BC, ABC) including Alibaba, the Tencent Corporation and Union Pay payment system all have the authorization to conduct business using the crypto yuan.
As the crypto yuan consolidates its position in the market. The number of companies ready to adapt this form of currency has gradually increased.
With talks of plans to develop a national Chinese digital currency, the effects could catapult the RMB into uncharted financial territories and contribute to the internationalisation of the cryptocurrency. It could be possible that the Chinese yuan could replace the US dollar. Giving the yuan an opportunity to be used as a leading international trade currency. Blockchain technology is being adapted into the framework for the integration of these digital currencies.
The ineffectiveness of the digital RMB lies entirely in the fact that Chinese authorities use strict measures to control the liberty of their citizens. States use multiple surveillance methods to trace all financial transactions through banks. This gives authorities complete access to information of every coin exchange. It would be interesting to envision a world where every dollar were tracked! The Chinese yuan is issued on a centralized blockchain. A one-time coin ejection only distributed by the authorities. Each coin is essentially microchipped. Chinese nationals involved in financial transactions using the crypto yuan will be monitored. Every purchase and every exchange.
Information on spending habits of individuals in societies reveals details on location and social status. Intelligence gathered by institutions unjustifiably violates the privacy of sovereign individuals in society. “He who owns the information, he owns the world” — Vadym Danko. The manipulation of using engineered social programming methods are far more effective tools that can be used to control a population.
Possible Implications — Emergence of the Crypto Yuan.
In order to comprehend the nature of what is happening — it is apparent that governmental and state institutions have turned their attention to the integration of digital currencies. New technologies of blockchain and crypto are steadily becoming familiar to a wider audience. Perhaps in the near future, governmental institutions will most lightly try to subjugate cryptocurrency markets. Giving rise to digital currencies — coincidentally will try to pressure countries in favor of financially decentralized cryptocurrency. The launch of the DCEP system can encourage a motif for social tolerance and acceptance for the assimilation of blockchain technology. Investment organisations should be more willing to accept change by, access to information and education on the subject matter.
With respect to the cryptocurrency mining industry in China, it is readily evident that the concerns of Chinese cryptocurrency miners continue. The authorities are gradually applying pressure on industry sectors. Sources claim Yunnan authorities demanded the closure of sixty-four cryptocurrency mining farms, seven of which are under construction. According sources, the projects commenced without the official approval from regional governments and authorities, as a result a number of mining farm properties are on the market. Yunnan, along with Xinjiang, Inner Mongolia and Sichuan provinces, are leaders in the Chinese cryptocurrency mining sector. They account for an estimated 30% of the global Bitcoin hashrate. Incidentally, Sichuan authorities are deeply involved in a number of cases. In May 2020 an announcement was made with the intention to financially back cryptocurrency mining companies. The end of the month was met by catastrophic news of the legal implications and penalties these companies would be facing. A ban on the extraction of cryptocurrency had been affirmed. The emergence of the crypto yuan will only complicate the situation for miners further.
Author: Jasmine Leeuw
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