People discussed pretty much all about Bakkt, Bitcoin‘s price, Facebook’s Libra project, and China‘s state-backed digital currency in 2019. While China has worked in terms of releasing its digital currency, one of the main highlights related to digital currency is that it will become a tool to follow financial transactions.
Conflux’s co-founder shares his opinion about China’s DCEP
YuanJie Zhang, the co-founder of the blockchain protocol, Conflux, stated that a state-backed cryptocurrency is a breakthrough for the monetary systems in an interview. He said that China would be able to trace the money flow with a digital version of RMB, as well as maintaining control as a custodian. First, the central bank’s control has been losing out on with the advent of commercial banks, and later to technology companies including Alibaba and Tencent.
Mr. Zhang said the Chinese advancement can really go a step forward because digital currency electronic payment (DCEP) has already been very well-known in China. Furthermore, if China wants to expand its fiat currency into a global mass-scale, a digital currency supported by the Central Government could be an effective way to circumvent the current financial system backed by many states.
Later, Zhang also mentioned if the state-backed cryptocurrency is going to be used for mass surveillance. He claimed that the technical details of the digital version of RMB have not been publicized yet. Still, he was certain that there have been claims that the central bank can track either abnormal or normal transaction behavior using big data, even though the digital currency can keep anonymity for ordinary users. Overall, most of the ordinary people can use this digital currency and their identity will not be revealed, while illegal transactions usually have special abnormal patterns.
He stressed that cash would be the best option for ensuring complete financial transactions anonymity, even the Bitcoin. Zhang also highlighted that not only the government, but also big companies like WeChat, Alibaba, Facebook, and Google will take your financial confidentiality.
Blockchain or public chains like Bitcoin, Ethereum, anonymous cryptocurrencies like Monero or ZCash or even Zhang’s Conflux can become another complementary system to it. But who knows, because digital currency backed by the central bank hasn’t been launched yet.
China has launched test DCEP model in a small area
At the beginning of December 2019, China’s PBoC launched a test of the DCEP model in Shenzhen, Suzhou.
The Shenzhen pilot program will be conducted in two phases; after a small test-run, the DCEP model will be advertised through the city in 2020. Many speculate that China’s digital yuan project was conducted by Facebook’s announcement of Libra in June.
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