Recently, in a statement issued on its official website, People’s Bank of China (PBOC) has announced a plan to launch its own digital currency.
In light of this big news from China, Cointelegraph conducted a survey of industry experts to hear what they think of the move and how it affects the cryptocurrency market.
Centralized Currency vs. CryptoCurrency?
If PBOC launches its own digital currency, will it have anything to do with cryptography at all? Can a centralized virtual currency ever compete with cryptocurrency where no third party involvement exists?
Tone Vays, head of research at BraveNewCoin, thinks this move from the PBOC has nothing to do with cryptocurrency at all.
“The PBOC already has a Digital Currency, it's called the Yuan. The only difference will be the elimination of physical bills. It will have absolutely nothing in common with bitcoin and will never compete with the only use case the Bitcoin Blockchain currently has - Permissionless Value Transfer."
Jeffrey A Tucker, who is a distinguished fellow of the Foundation for Economic Education believes:
“A government starting a crypto-currency today is a bit like the post office starting its own email in 1995. They can do it but getting people to choose a centralized public version over the decentralized market version is the real challenge. I don't believe that the Bank of China or any other central bank is up to it.”
Manie Eagar, founder of the BlockChain lab, added, “They have seen what bitcoin and other cryptocurrencies have done in their market which was their initial fear - they cannot control it - they expect it to be compliant, taxable, auditable etc.”
Improved Centralized Virtual Currency?
Would a centralized virtual currency like this work better than the traditional banking system?
Patrick Dugan, a board member of Omni Foundation, thinks it will carry all the disadvantages of a banking system other than maybe faster processing time:
“The Chinese economy might just do ok, and it will be continue to be pretty big, so this is a huge gesture that shows centralized authorities, highlighted by the CCP who are the foremost Leninist organization on the planet, are taking blockchain technology seriously. It will carry all of the disadvantages of banking except for perhaps slow processing times.”
Jure Pirc president of Bitcoin Association Slovenia said: “If the national bank adopts blockchain and issues its own cryptocurrency, it’s a step in the right direction but only if the ledger is public.”
When asked, how relevant the claim from governments that bitcoin can abet money laundering and fund banned organisations is, Tone Vays from BraveNewCoin said:
"Money Laundering has become the biggest go to phrase for indebted western governments in order to make sure they collect every penny of tax revenue or confiscate people's wealth to stay in power. Bitcoin takes away their ability to enforce financial regulation and that is why no western government will ever adopt the only viable public Blockchain unless it goes through a 1930's style collapse."
Threat to Bitcoin?
Is a country launching a centralized virtual currency a threat to cryptocurrencies?
Simon Dixon, the CEO of BnktotheFuture.com thinks it doesn’t stand a chance. He said:
“Crypto Currency does not need governments to make them work better. Bitcoin works very well because it is not issued by a government and is regulated by maths and code which is less corruptible than a office full of people developing regulations and policies who are all capable of corrupting the currency to support a certain agenda”
Alireza Beikverdi , co-founder at Bitholla said: “It is a large market. It can affect bitcoin mining for sure which definitely influences the price and nothing more than that. PBOC's new digital currency does not really compete with decentralized digital currencies such as bitcoin. It’s only a small improvement in digital banking.”
Will more countries follow the example of China?
Jure Pirc thinks:
“People’s Bank of China adopting the technology will send a very clear message to the rest of world and after the act we can expect many countries to follow and mass adoption of crypto-technologies will follow. It can be a positive thing.”