The Chinese government seeks to create a cryptocurrency that gives it greater control over citizens. Bitcoin is a tool that bothers the Communist Party of China.
China is preparing to launch a blockchain supporting its national cryptocurrency, but it cannot be expected to resemble Bitcoin. Blockchain technologies “made in China” will be centralized, since its current political system does not allow otherwise.
The ideals of the cryptocurrency are not compatible with the centralized exercise of power. The forms of governance currently held by different states do not allow issuing currency with the same characteristics of Bitcoin.
The case of China is even more complex, since not only will the People’s Bank of China (a centralized institution) be responsible for issuing the new crypto asset, but this project is promoted by a deeply controlling government.
In the Hands of Power
In a democratic state, all people can participate in government decision-making, but indirectly. It is the representative, whether president, deputy or governor, who makes decisions based on society’s needs.
If the Central Bank of a country, such as the People’s Bank of China, issues a national cryptocurrency and it can only be expected to be centralized. Bitcoin solves the need for a higher institution to issue currency of value, generating a network of miners that confirm transactions and issue bitcoins.
If a currency is issued by a Central Bank, it is not its users’ but the government’s. Several months ago, the Communist Party of China stated that the new cryptocurrency has the ability to give Beijing more control over its financial system. The People’s Bank of China seeks to replace the cash in circulation with the new digital currency, which allows it to monitor person-to-person transactions.
More Control for the State
Xi Jinping is the general secretary of the Central Committee of the Communist Party, president of the Central Military Commission and president of the Republic. In other words, a single man occupies the three highest positions of power in Chinese politics to avoid dissent and internal struggles.
Not surprisingly, public blockchains like Bitcoin or Monero are uncomfortable tools in the Asian giant. The principles of transparency, privacy and decentralization give cryptocurrency users the possibility to empower themselves. Individuals who can control their own information and who do not depend on the State are free citizens.
Government Does Not Bless Bitcoin
The reason why the Chinese government has battled Bitcoin for three years is that it cannot be controlled by the People’s Bank of China. The cryptocurrency causes discomfort in any country, but China’s strife to regulate and ban cryptocurrency trading is unprecedented.
In 2017, the Central Bank of China first announced the inspection of national cryptocurrency exchange houses. The move led to the cessation of operations of the three most important exchange platforms in China. In addition, that same year the authorities banned the making of Initial Currency Offers (ICO) throughout the territory.
Year 2018 was even worse for that market, since a new anti-cryptocurrency policy forced the closing of 88 exchange houses. The websites enabled for the sale of Bitcoin were also blocked nationwide and the events related to the ecosystem were totally prohibited. Despite the regulations, the Bitcoin trade did not cease in the region and today it is sustained thanks to the exchanges with Tether.
By Willmen Blanco