TheCryptoElement
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China goes on the offensive with the Digital Yuan, and here’s what it means for you.

China is an extremely competitive country, and despite its morally objectionable activities, the way it reacts to the pulse of technology is impressive. China has an always been a top player in the Blockchain industry despite its relatively conservative regulations on Cryptocurrency. Today we will talk about BSN’s ChinaChain and the Digital Yuan.

It became public news that BSN will be China’s frontrunning Blockchain Platform on 25th April 2020. This happened amidst the SARS-COV-2 pandemic, increasing international tensions, and China arresting digital activists who fought against Coronavirus censorships (This one was straight out of Orwell’s 1984, I swear). China aims to establish ChinaChain nodes in 200 Chinese cities, they say it will reduce the cost of Blockchain-based businesses by 80%. It is the Chinese equivalent of Ethereum, but I am not 100% clear on the details yet. BSN’s ChinaChain, to me, based on my surface-level skimming of the Whitepaper, looks like a mix of Hyperledger Fabric and Ethereum. It does have a similar Stake based consensus, while still being permissioned. Till further studies on it are done, I will refrain from any misinformed commentary.

China took another leap forward and pushed DCEP out into the public. DCEP is Digital Currency Electronic Payment, which is the national digital currency of China, which is built to be 1:1 with the Chinese RenMinBi (or Yuan). This is a direct competition to Facebook’s Libra. Both of these want to become a widely adopted payment system, but the DCEP is backed by the Chinese Government, and Facebook is still playing around with Libra. DCEP is not based on speculation, it’s backing value is the RenMiBi/Yuan and it has an unlimited supply. It also isn’t a third party stablecoin like CNHT (another 1:1 CNHT: RMB coin), It is issued by The Chinese Government. Since it provides ease-of-cross-border-payments, There is a general consensus that this will clearly affect the Global Market. In October ‘19, dictat- , ehm, President of the People’s Republic of China, Xi Jinping stated that China needs to “seize the opportunity” that Blockchain presents. Despite banning Bitcoin, China threw its weight behind Blockchains, and Xi’s love for Crypto and Blockchains made the Bitcoin went full Bull, going to 10k USD, after a plunge. While the US was fumbling with basic Social Media, forget Blockchains, China started setting up zones to give Cryptocurrency a dry run, this was while China was basically leading the world in Blockchain innovation. It was known that China was working on its own Coin. After around August, the China-Blockchain hype started to warm around the world, people didn’t forget, but as is the case with the modern world, people started to look at other things.

Photo by Li Yang on Unsplash

While the Central Bank of China (I think it’s called PBoC) has not issued an official statement about the release date for DCEP, but some sources claim around June 2021. DCEP is already in dry runs in some zones, China has focused a lot on making the process seamless. For example:

  • The UX is a lot like the AliPay/WePay common in China.
  • Transfer by account number, QR code is available as well
  • Transfers can be made without the Internet, using NFC or Bluetooth
  • There is a touch and pay feature, which allows you to pay via tapping
A comparison of the DCEP app, Alipay and BoC mobile banking app

The last time I saw a country pushing a financial decision this hard was during India’s demonetization of certain bills. At 300k Transaction per Second, DCEP can be adopted by major operators, as well as be used for micropayments. Keep in mind, this is still centralized (Cryptocurrency and Defi are not the same things). The Central Bank will indirectly put these into circulation. I will technically dissect DCEP and the new payment portal once everything is clearer.

Mu Changchun is one of the leaders of this effort. When questioned why did they develop DCEP, he “It is to protect our monetary sovereignty and legal currency status. We need to plan for a rainy day”. Sure, Mr. Changchun, Sure.

How will this affect you?

[Opinion] Yuan may only grow stronger in the wake of recovering economies, as the world becomes more China reliant, and China becomes less Oil reliant. There are a lot of other big decisions coming through BOJ’s stimulus expansion, The major Oil plunge, insane unemployment rates et al. All of these will affect your currency, there are talks of inflation, there are talks of recession. No one knows what will happen. But one thing I am sure of is that ChinaChain, Filecoin, DCEP — All point to a very strong future for Blockchain. With DCEP and its benefits: less hassle of banks, offline transactions, higher international acceptability, etc.- rest of the countries might consider digital frameworks for their currencies. Libra and Ton will see a surge in acceptance because there is a hubbub of distrust in the Chinese market right now (as of Mid 2020). China’s move towards cashlessness is seen by some as a subtle advancement towards more tracking, controlling more and more of the capital, and creating an environment of higher spending - I won’t comment on any of those. It would also be very interesting to see the effect of DCEP on older Chinese coins like NEO (The alleged Ethereum Killer). No one knows for sure what will happen, all we can do is #hodl and see what comes next.

🌺 Hey, hope you enjoyed reading that article. I am Abhinav, editor @ The Crypto Element. This was originally published in Data Driven Investor.

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Abhinav Srivastava

Abhinav Srivastava

Building: Ignite Tournaments / Former: DeFi Alliance, Persistence, Eth India Co

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