China’s Central Bank Not Backing Bitcoin as Currency
China’s central bank does not think Bitcoin has the ability to be a functioning currency but maintains that it is still valuable as an asset.
An adviser for the People’s Bank of China has said that digital currencies, like Bitcoin, do not have what it takes to be a viable alternative currency, but backs them for their ability to hold value.
Bitcoin’s own classification is still quite muddy with it showing the characteristics of many different things. It has been compared to digital gold, as a valuable asset that grows in worth, but it has also been integrated into pay systems in retail stores recently.
China has itself been a bit two-faced in its appropriation of digital currencies, as it has gone from banning withdrawal of the asset, to setting regulations on it aimed at stopping fraud and scams around the digital currency.
Sheng Songcheng, the advisor from China’s Central Bank, made these thoughts public in an interview with financial magazine Yicai.
"Bitcoin does not have the fundamental attributes needed to be a currency as it is a string of code generated by complex algorithms...But I do not deny that virtual currencies have technical value and are a type of asset," he said.
China has always looked to have a stern hold over digital currencies, which, with their anonymity and decentralized nature, are in direct opposition to the socialist state. But when Bitcoin broke records by tipping the scales at $3,000 a coin, it was classified in the People’s Republic as a “virtual good.”
Part of Sheng’s reasoning for Bitcoin leaning towards an asset rather than a currency is the fact that it is a finite commodity with the supply predicted to run dry in 2140. He believes this would make it hard to act like a currency as it could not meet modern economic demands as the currency supply is intrinsically linked to economic needs.
Sheng also reiterated a point that has been recurring in the Central Bank’s idea locker, stating that they should investigate issuing a People's Bank of China digital coin that can be regulated and run by the government.