China’s national digital currency is in the works, which would monitor transactions and curb money laundering. However, according to a recent interview with CNBC on November 5, 2019, Ethereum co-founder, Joseph Lubin, believes that China’s central bank digital currency (CBDC) lacks a key component of blockchain technology, which is decentralization.
China’s Central Bank Digital Currency Not Decentralized
According to an earlier report by BTCManager, China revealed its plans to launch a central bank digital currency (CBDC), a project led by the country’s central bank. The move by China seemed like a turnaround from its previous negative stance against bitcoin and cryptocurrency in general.
But Lubin, who is also the founder of ConsenSys opined China’s CBDC is just a digital currency and nothing more.
China is probably not interested in that aspect of blockchain technology. They, I believe, will bring a digital RMB to China that makes use of some of the elements, some of the primitives, say cryptographic primitives of blockchain technology. But there is no real reason for China to make use of decentralizing aspects of blockchain technology.
Lubin added that the only way China’s national currency would adapt the full characteristics of distributed ledger technology (DLT) is if there are other stakeholders apart from the People’s Bank of China (PBoC) involved in the project. The Chinese government earlier stated that it was in no hurry to launch its CBDC.
China’s National Currency as a Control Tool
The Ethereum co-founder when answering questions on whether the country’s CBDC would give the government and the PBoC more power and control stated that the Chinese government and the apex bank already considerable control.
Instead, the country’s national virtual currency would just enable the government to maintain control.
In Lubin’s words:
I think that the central bank and the government have very significant control already. My guess is that it would be used to maintain the control that they have but also to potentially enable interoperations between more public systems or more global systems.
China is particularly known for its high level of censorship and monitoring — namely “the great firewall of China.” Decentralization does seem antithetical to the ethos espoused and maintained by authorities in Beijing.
Despite China’s previous history with cryptocurrency, it appears the country could be gradually embracing the nascent technology. According to a recent report, the country was looking to launch a Digital Currency Electronic Payment System (DCEP) before the end of 2019.
Also, amid enlightening the public about DLT and cryptocurrency, the Chinese government passed the “Cryptographic Law” which would be implemented at the beginning of the year 2020.