An Inside Look At China’s Government Controlled Cryptocurrency Project

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China, a country that has exerted more control over cryptocurrency than most, continues to move forward in its efforts to introduce a government-controlled cryptocurrency.

A group of Shanghai reporters recently got a chance to learn about this secretive project during the Global Blockchain Summit Forum, sina.com.cn reported. The visit shed light on the extent of the government’s efforts to create a national cryptocurrency. The reporters visited the Bank of China Credit Card Industry Development Co., Ltd. Hangzhou Blockchain Technology Research Institute.

Standards Announced

China’s ministry of industry and information technology revealed last week that it has already conducted a study exploring a framework for standardizing blockchain technology domestically. The ministry’s information and software services division and the China Electronics Standardization Institute proposed that a new technical committee to be established.

The embracive stance toward blockchain technology is in stark contrast to China’s crippling curbs against local cryptocurrency markets which have seen initial coin offerings (ICOs) outlawed and crypto exchanges phased out to effectively shutter domestic trading markets.

The China Banknote Bank Credit Card Industry Development Co., Ltd., one of the core companies of the China Banknote Printing and Minting Corporation, is the earliest team to study digital currency and blockchain technology within the central bank system, sina.com.cn reported.

The team last year established the Banknote Blockchain Technology Institute.

Leading the team is the central bank’s science and technology leader Zhang Yifeng. According to Yifeng, the overall research and development team is less than 100 people.

The Project Progresses

The China Boxer Blockchain Technology Research Institute has applied for 22 blockchain technology invention patents so far, sina.com.cn reported.

The team’s underlying technology architecture has been completed and the central bank’s digital billing business has also been completed, according to Yifeng. Currently, it is promoting the opening and closing of a blockchain registration platform.

Yifeng said the most important part of the blockchain is to re-optimize the technology in combination with the actual business while looking for application scenarios.

Not only can the participants of the platform use it, they can also conduct institutional certification and circulation, and achieve mutual trust and cooperation among all parties.

The biggest difference between digital currency and the existing electronic payment is that it can be account-based or non-account-based, Yifeng said.

Digital currency seeks to facilitate the convenience, speed and low cost of a retail payment system, while at the same time providing security and protection of user privacy.

Also read: ‘ASAP’: China  is working toward national blockchain standards

Only The Official Cryptocurrency Recognized

Only the statutory digital currency issued by the central bank is the real digital currency, he said. Not bitcoin or Ethereum.

The digital currency represented by bitcoin is actually a digital asset with stronger attributes, more volatility, and mostly lacks intrinsic value, he said. Digital currency still needs to satisfy the basic attributes of money, and the basic characteristics of value scale, exchange media, payment instruments, and value storage have not changed.

The coins issued by ICO are even more ridiculous, Yifeng said. In addition, he asked, how can a sovereign credit currency act as a liquidity instrument and payment instrument?

There is no clear timetable for the launch of the legal digital currency, he said.

Meanwhile, the Blockchain Technology Research Institute will establish cooperative relationships with a number of universities and research institutes to promote research in areas such as cryptography algorithms, zero-knowledge proofs, and distributed technologies. At the same time, it will apply for more financial technology patents.

The Digital Billing Platform based on blockchain technology that was undertaken by the Group of China Boxer Blockchain Technology Research Institute in 2016 was successfully tested on the Stock Exchange on Jan. 25 this year, according to sina.com.cn.

Fan Guiluo, chairman of China Bills Credit Card Industry Development Co., Ltd., said that blockchain, as a trusted technology, will be used under the trustworthy system of the Chinese banknote printing and minting company.

Featured image from Shutterstock,

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