US should help crypto firms or lose to china according to Fortune.com experts. The recent announcement of the digital currency of China based on blockchain has revealed their intention to modernize even if the rest of the world isn’t willing to get onboard.
Mark Zuckerberg made a similar statement when testifying before congress last week. He made the claim that if the USA does not get onboard with the blockchain technology, and subsequently cryptocurrency, the rest of the world will race ahead. In particular, he mentioned China and it’s move towards a National Digital Currency based on blockchain.
China’s central bank may launch its own digital currency in the next 18 months amid strong endorsements of blockchain from the highest levels of government, signaling a desire for China to be self-reliant and globally competitive and adding another dimension to the growing U.S.-China tech rivalry.
“China is making these very large macro plays,” says Mike Wasyl, managing partner at DeerCreek, a corporate strategy firm that specializes in fintech and works with blockchain companies across Asia-Pacific and the U.S. “They want to maintain control and be seen as leaders and so adopting blockchain and being public about it, as we saw recently, is going to stir a lot of interest.”
Blockchain technology underpins digital currencies, and also has applications in smart manufacturing, supply chain management, and the Internet of Things.
Chinese President Xi Jinping threw his support behind the development of blockchain in at a Politburo study session in late October. He didn’t mention digital currencies in the study session, but that did not prevent stocks in Bitcoin and other cryptocurrencies, and a total of almost 200 blockchain-investing companies, to surge after his endorsement.
“With the recent announcement by President Xi, I believe China will further accelerate the innovation of blockchain applications including state-initiated projects such as Central Bank Digital Currency,” Duncan Wong, chief executive of Hong Kong-based startup CryptoBLK, told Fortune.
The People’s Bank of China (PBOC), the central bank, has been researching a digital currency since 2014 but recently accelerated its efforts in response to Facebook’s proposed digital currency Libra, a platform-based payment service backed by a basket of currencies weighted towards the U.S. dollar.
A PBOC-issued digital currency would let the government retain control of the money supply and monitor and regulate capital distribution. It would also function as a safeguard against a border-hopping Libra, which lies outside government regulation and which would struggle to gain traction if the PBOC currency, “DCEP” (digital currency electronic payment), was already in widespread use.
“Currency is just one—albeit very large—power proxy struggle between the two giant powers,” Wasyl says.
China has the advantage of already having a huge digital payment ecosystem—Tencent’s WeChat Pay has over a billion users and Alibaba’s Alipay has 1.2 billion—which will make it easier to adapt to the DCEP.
“China’s just making a giant move forward in trying to come out with their central bank digital currency first,” Wasyl says. “It’ll definitely send messages to the world that this is kind of the new paradigm.” US should help crypto firms or lose to china according to Fortune.com experts.