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China’s PBC Is Warming Up To Digital Currencies — Good News For Bitcoin, ETH, XRP, and LTC
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China’s PBC Is Warming Up To Digital Currencies — Good News For Bitcoin, ETH, XRP, and LTC

China’s Central Bank, the People’s Bank of China (PBC), is planning  to introduce its own digital currency.

That’s according to an article published in Globaltimes last week, which says that the PBC applied for 74 patents involved with digital currencies to the National Intellectual Property Administration, in order to speed up the development of a legal digital currency.

That may come as a big surprise to some. Back in 2017, China banned Initial Coin Offerings (ICOs), and stopped direct Bitcoin-yuan trading, crushing cryptocurrency markets.

Now, cryptocurrency experts see PBC’s efforts to introduce its own digital currency as a recognition of the many advantages cryptocurrencies have over traditional currencies, and therefore, consider those efforts to be good news for major cryptocurrencies like BTC,ETH, XRP, and LTC.

Kevin Sekniqi, Co-Founder and Chief Protocol Architect at AVA Labs, is one of these experts.

“China’s foray into digitizing the yuan is a key milestone in changing how money is represented, stored, and moved,” he says. “Global, sovereign level adoption of digitized assets is a testament to how transformative and impactful decentralized ledger networks have become.”

Meanwhile, he sees PBC’s move as a source of further financial innovation. “Coupled with the fact that China has completely adopted digital payment technologies, we can hope that a digital currency issued by the PBOC will further augment China’s ability to build many new financial primitives,” he says.

Dave Hodgson, Director and Co-Founder of NEM Venturesagrees“It’s positive to see the Chinese Central Bank engaging with digital financial services and moving towards a better user experience for its citizens,” he says.

Still, he points to the centralized nature of PBC’ proposed currency as a limiting factor.

“The proposed approach is still a centralized system, run by a national government,” he says.  “As a result, this wouldn’t be considered a decentralized cryptocurrency and in the People’s Bank of China’s words, ‘It is to protect our monetary sovereignty’ – a pseudonym for control over currency. “

While Hodgson sees the new currency competing with China’s other digital currency, he doesn’t see it competing with major cryptocurrencies. “I believe that this move will likely disrupt other digital currencies in China, such as WeChat and Alipay,” he says. “While other governments may take note and follow suit, this currency doesn’t appear to be cross-border and is centrally controlled, which makes it a different proposition to cryptocurrency altogether.”

Pradeep Goel, CEO of Solve.Care, sees central bank-issued digital currencies as supplementing major cryptocurrencies, too. “The uses of digital currencies have significant potential and known benefits, and these advantages are compelling enough to merit the careful adoption of these currencies,” he says. “Whether the private sector leads and central banks follow, or whether the central bank leads and the private sector follows, will vary by country. For example, in Sweden, the central bank is leading the way with the introduction of an e-krona.”

And Tomer Afek, CEO and Co-Founder of Spacemeshsees other central banks following through with their own digital currencies. “It’s a certainty that other central banks will follow China’s lead; the writing’s on the wall.  Currency is already well on its way to becoming fully digitized, and cryptocurrencies are a necessary evolution – and revolution – of that process,” says Afek. “States will inevitably want to ride the wave, hoping to get ahead of its potential to shake up the status quo.

That could create a world of multiple cryptocurrencies.

“This is only the beginning for cryptocurrencies, and they’ve already proven their ability to capture the value that has been omitted by the traditional monetary system,” he says.  “I envision a world where multiple cryptocurrencies exist, each one serving a different need. The central banks will just become another set of competitors and service providers in this system.”

Still, the central banks will always have the upper hand, ready to trash decentralized cryptocurrencies should they threaten their monopoly of creating money, as discussed in previous pieces.

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