Chinese Crypto – DCEP
Some reports said that China would launch its Digital Currency/Electronic Payments (DCEP) in the month of November. A large domestic finance magazine named Caijing claimed that it would be released at the end of the year 2019 in Shenzhen. But these predictions have proven wrong.
The head of the Chinese central bank’s digital currency research institute Mu Changchun has said in the presentations that China is set to launch DCEP very soon. Mu also said that this sovereign digital currency of China is different from the other cryptocurrencies such as Bitcoin that are decentralized and provide anonymity and security to users.
Also Read: 5 Things to Know Before Investing in Bitcoin
DCEP is different from other digital currencies such as Bitcoin
China’s DCEP is different from decentralized digital currencies. The CEO of VoneChain Technology Terry Liu presents three differences between DCEP and other digital currencies.
First of all, cryptocurrencies such as Bitcoin are decentralized and are not controlled by the governments rather an algorithm controls its source. While on the other hand, DCEP is a government project therefore, it is centralized and controlled by the government. Also, the Chinese government aims to distribute digital currency by using banks and monetary systems. Secondly, he says that the blockchain ledger of DCEP will be controlled by the government as compared to the other digital currencies.
The final difference is that this digital currency is integrated throughout the commercial system and will operate similarly as normal currency operates. It will also be used practically in everyday situations because it does not include time lags.
The Chinese government calls it illegal to not accept the paper money as people mostly use mobile payments. The founding partner of Reuter Communications Chloé Reuter says:
“With a population already very well-used to cashless spending thanks to WeChat Pay and Alipay, it wouldn’t be anything new to deal with another form of digital payment.”
Government to build a digital infrastructure for future development
With the release of its own powerful digital currency, the Chinese government is preparing to build a digital infrastructure that is important for the future development of the country. Jingyang which is known as one of China’s first investors in bitcoin points out:
“The government has always taken the reigns of building infrastructure. Just like they built ports and rail, they’re now gearing up to build the digital infrastructure that is necessary for future development.”
A wide range of factors prompted the Chinese government to launch its own digital currency. China banned the use of cryptocurrencies in the country because the digital currencies such as Bitcoin and Ethereum stand in contravention to central banks. Apart from this, the Chinese digital currency will push the country toward a digital era and will prove beneficial for the country’s development.