Last month, the People’s Bank of China (PBoC) announced that there is already an ongoing development of a digital currency to answer Facebook’s upcoming Libra.
A little over a month later, it was revealed that the PBoC’s answer was already completed, which signifies that the development started way earlier than its announcement.
With the trade wars between China and the United States heating up, both sides are already drawing lines in preparation an eventual escalation. Each side is after total global monetary supremacy and China is heading towards centralized control and a complete suppression of foreign influences.
Given the country’s history, it’s fair to say that China has more or less always suppressed technologies which were under the control of a countries which it had major disagreements with. Based on the situation with the trade wars, the most recent example would be the Great Firewall of China, which was used to remove access to social media platforms like Twitter and the Google search engine.
Cryptocurrencies have been more or less suppressed in the same way. Despite China being the undisputed crypto mining center of the world, the country’s stance towards cryptocurrencies still remains hostile. The mining facilities in China frequently come under investigation by the local authorities, but things seem to quickly move on.
The trade wars could last quite a while
This basically means that while China is planning to launch a single, monolithic digital currency and suppress all others, many new initiatives will become available in the West. This includes both digital currencies designed for retail payment as well as business-to-business (B2B).
That being said, China’s upcoming answer is facing heavy criticism before its release not only because of the Chinese government, but also because of the history of stablecoins.
The stability of stablecoins has always been a meme, but that’s mainly because these digital assets are asset-backed. In the majority of cases, these assets are held in a reserve and if the market goes south this reserve comes into play to bring the price back up.
History shows that there are literally no assets in the history of that exhibited a stable value over time. There are only those who remain stable due to the value of another asset. This means that there’s basically no universal way to establish a stable threshold of value that is long-lasting.
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Tags:China supress technologyPeople's Bank of China Librastablecoins memeUnited States China trade wars