Should the U.S and the rest of the world worry about the upcoming, high-speed China digital currency? The state-sponsored project was anticipated, but not so soon.
How will the U.S. and the rest of the globe respond to a state-sponsored cryptocurrency from China? That’s one of the questions crypto enthusiasts, traders and financial analysts have been asking for the pass couple of days.
The highly anticipated China digital currency project is expected to expected to be super fast, fully centralized, and will be under the control of People’s Bank of China (PBoC).
How fast is the upcoming and highly enticipated China digital currency?
According to PBoC’s deputy director, Mu Changchun, the digital currency’s smart contract or protocol will process 220,000 transactions per second.
To illustrate how fast China’s digital currency is going to be; Bitcoin is processing seven transactions per second and that’s considered fast in today’s blockchain technology.
To further illustrates China’s digital currency proposed speed, Facebook’s Libra stablecoin, announced by CEO Mark Zuckerberg in July this year, estimated to process 1,000 transactions per second.
What are the crypto and financial experts saying?
Yang Wang, a Fintech Institute of Renmin University of China senior fellow put it like this to the Global Times:
“In terms of technology, China’s digital currency excels, whether in its security level or speed, which means it will surpass competitors in user experience.”
Mr. Wang added:
“China now definitely comes out at the head of the list when it comes to digital currency technology.”
However, some worry that China’s digital Yuan cryptocurrency coin is worrisome because of it’s a social credit rating-based system. The concern is centered around the Chinese government tight control over its citizens’ activities and wealth.
Why is China cracking down on cryptocurrency exchanges?
In anticipation of its state-sponsored digital currency release, China last month began cracking down on cryptocurrency exchanges. Xi Jinping’s government shutdown over 200 trading platforms in less than a week.
Another concern expressed by the crypto community is that because China digital currency is decentralized, the government will harvest traders’ financial and personal data.
Binance, the popular crypto exchange who opened an office in Beijing despite the crackdown release, release a research paper, in which they analyzed a prototype of the system.
The research results stated:
“Unlike privacy coins, central authorities would be able to gather information. Eventually, identities would likely be tied to respective individual wallets, hence making it fully non-anonymous, unlike Bitcoin.”
Despite the concerns, Binance’s CEO, Changpeng Zhao maintained that a China digital currency will likely benefit the cryptocurrency market. The project is expected to go live in early 2020.