Posted 1 year ago | by Ben Armstrong
Venezuela Looks to Bitcoin for Trade Settlement, Reserve Asset
As English-language news media outlet China Money Network reported on January 1, 2020, China has formally implemented a law governing cryptographic password management, which is part of its pre-release plans for its central bank digital currency (CBDC).
China is the first major global power to introduce a digital version of its national currency, sometimes called a CBDC. Unlike cryptos, CBDCs offer nothing in the way of anonymity, nor are they an independent currency. While China's CBDC may use blockchain, it isn't really a crypto.
Cyber Security Makes a CBDC Possible
According to Cointelegraph reported, the Standing Committee of the 13th National People's Congress in China passed the law which will allow the launch of the CBDC on October 26, 2019.
Among other things, the law divides passwords into three distinct categories are passwords, common passwords, and commercial passwords, which aims to facilitate China’s transition to blockchain technology.
China Money Network referenced Japan Economic News for commentary on the subject:
“In order to prevent data from being tampered with, it is necessary to protect each data with a password. The development of blockchain technology cannot be separated from the progress of cryptography technology.”
No Release Date for the Chinese CBDC
The actual release date of the CBDC has not yet been confirmed by China's government. At the end of last year, the People’s Bank of China (PBoC) confirmed a CBDC would begin live testing with selected banks before 2020. If this happens, it will become the first CBDC in a major nation.
Beijing's pivot to blockchain in late 2019 roiled the crypto markets, with many saying that China had a change of heart when it comes to tokens. Chinese state-controlled media stomped this idea out, and pointed out that the strict ban on cryptocurrency trading was still in place, which began in September 2017.
Cryptos don't fit into the Chinese social model, which is focused on an all-powerful central party that has absolute control over the nation. Decentralized digital money empowers people, which is at-odds with Beijing's goals.
China's Project Not in-line With Existing Cryptos
The ultimate goal of China's new CBDC is unknown. It may just be a way to make Chinese digital payments more efficient, and cut humans out of the banking system. Blockchain could make the Chinese banking system more efficient, and allow Beijing a greater degree of control via blockchain's transparency.
If China thinks that its new token will have the same kind of popularity that Bitcoin has found, it is likely to be disappointed. Crypto users probably don't trust the PBoC as a counterparty, as it is the central bank of a totalitarian nation.