For half a decade, Chinese authorities have had plans of introducing their own state-run digital currency, tentatively dubbed ‘DCEP,’ while at the same time curbing the use of privately launched digital currencies and cryptocurrencies alike.
The Chinese Digital Currency / Electronic Payments system, or DCEP, might turn out to be the only digital currency that will be allowed to exist within China. This comes at a time when Libra — the planned stablecoin project from Facebook, may never actually see the light of the day.
China’s DCEP would be issued in a ‘two-tiered’ system. The first would connect the People’s Bank of China (PBoC) with commercial banks in the country in order to issue the digital currency. The second will work to connect the commercial banks to retailers, businesses, and individuals.
The development of DCEP was in a sort of limbo for several years. However, since Facebook announced its plans to enter the space, the Chinese authorities seemingly ramped up the research and development of DCEP — perhaps looking to beat Facebook to the punchline?
Within a period of just over a week, the PBoC moved from expressing its priorities to the Party Central Committee and the State Council, to an announcement about the near readiness of DCEP made by Mu Changchun, the deputy director of the PBoC.
Although there are no technical specifications available, Mu explained that DCEP could not be reliably built and distributed through current decentralized blockchain technology, since the currency would need to be capable of incredible concurrency. Because of this, China is likely to turn to an alternative solution during the development of DCEP.
Inside sources have suggested that a conglomerate of banks, including the Industrial and Commercial Bank of China, the Bank of China, and the Agricultural Bank of China would be in charge of distributing and supporting the digital currency. High tech giants like Alibaba, Tencent, and Union Pay are also supposed to play important roles in getting the digital currency into the hands of users while supporting its infrastructure.
With the race to complete the public launch of DCEP currently underway, some experts have expressed concerns that this digital currency may not even be a cryptocurrency, but instead a centrally controlled digital currency that actually acts as a devious tool for surveillance.
DCEP is said to be using a controllable anonymity system where users from point-to-point would have the option to remain anonymous to each other but would not be able to stay anonymous to the state. Because of this, enacting such a system could give China more control over its economy and citizens, while providing an increased resolution on the spending habits of those within its border, and perhaps even globally.
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