China's take on cryptocurrencies
|Published: 17th April 2021 21:58|
China has always done things a little differently than the rest of the world. It is not unusual for them to have their own alternates to all sorts of global tech. The same goes for cryptocurrencies. China has a rather peculiar take on cryptocurrencies. While they, too, have recognized the power of virtual currency, they are adamant about having their own digital currency. That may not seem odd. However, they have also banned other popular cryptocurrencies, cutting themselves off the global network.
2017 Bitcoin Fiasco
Bitcoin has now become synonymous with cryptocurrencies. Even though there are many other virtual currencies on the rise, bitcoin was the pioneer. There has been a rather significant percentage increase in some other cryptocurrencies, and yet bitcoin stays on top.
However, 2017 is referred to as one of the worst moments in the short history of bitcoin. Due to multiple factors at play, bitcoin dropped down by a large margin, the largest ever in a running year. People have always been skeptical about the volatility of cryptocurrencies. The year 2017 increased their doubts about cryptocurrencies.
China had already warned people about the large financial risks cryptocurrency poses but allowed people to use it as a means of trade. Come 2017, and China decided it was time to put cryptocurrency to rest. It was one of the countries that concluded that bitcoin should be banned due to its instability and financial risks that it poses. The trading of bitcoins stopped and any activity related to bitcoins and, subsequently, most of the other cryptocurrencies were banned. The government conducted a crackdown on institutions that dared to defy the impositions. You can start investing in bitcoin using online platforms such as bitcoin trader
China to Release Its Own Cryptocurrency?
Given the crackdowns and bans on different cryptocurrencies, you would think that China is probably not in support of cryptocurrency. However, there are reports that China will be releasing its own cryptocurrency soon. Is China, despite its charades claiming that cryptocurrency poses substantial financial risks, getting on the bandwagon of cryptocurrencies itself?
Reports are that a cryptocurrency is being developed that would be centralized, which, in a lot of ways, takes away the whole essence of it as a cryptocurrency. One of the biggest selling points of all the other private cryptocurrencies is that they are all decentralized. While this does gives it a bit of uncertainty, trends have shown that it is the future of transactions. It can be deduced that by creating a centralized cryptocurrency, China is trying to take away the instability that comes with cryptocurrencies.
This leads us to conclude that Chinese claims of creating a cryptocurrency of their own are mere deception. Instead, China is making another fiat currency, but this time rather than using paper notes, they will be using virtual currency. It is far from what a cryptocurrency stands for.
Why Create a Digital Fiat Currency?
The Chinese government is known for its gripping control over its population. Many people believe that banning every other cryptocurrency and releasing their own is to keep the power dynamics in the government's favor. Not only does it have financial benefits for the government, but surveillance of their population through digitalized systems and currency will also be much easier.
China is also looking to challenge the position of US $ in the international market. Recognizing the importance of digitalizing currency in this time and age, China stepped up its game. A large number of people have shifted towards electronic transaction systems throughout the world. It can be deduced that by introducing their cryptocurrency, China is planning on making their currency available to the international community, breaking the US $'s hegemony. Digitalizing their currency can be seen as the most effective way to achieve this goal.
China could be one of the world leaders when it comes to mining cryptocurrencies. The potential available is remarkable. However, the government is adamant about imposing bans and regulations that make it tough to trade in cryptocurrencies. While these impositions do have an impact on the value of different cryptocurrencies, given nature, these cryptocurrencies will bounce back.