The terse document by Shuqing Guo (pictured), party secretary at China’s central bank, seems to suggest its out with blockchain, reducing it to just one mention alongside artificial intelligence and likewise technologies, and even then describes it as distributed databases.
That’s quite a turn just two years after Xi Jinping himself, China’s president, hailed blockchain as a technology they were to harness.
That role is now seemingly played by ‘digital currency,’ with pilots attracting international media attention as suggestions arise they might give it a role during the winter olympics.
The reality on the ground however seems to be of talk getting far ahead of substance, with the document saying there’s a need to “accelerate the research and development and controllable pilots of the central bank’s legal digital currency to ensure payment security.”
That suggests this is still work in research, with their pilots so far being very limited in simple one off giveaways that sound more like a gimmick than a realistic aim to upend their financial system.
The secretary however points out that financial revolutions come with industrial revolutions, and thus wonders “whether the financial system can fulfill the historical mission of supporting the fourth industrial revolution.”
Not in China because they kicked out the financial system which could support the industrial revolution by closing crypto exchanges and experimentation.
To alleviate deep concerns within China of losing out, they suggested they could do top down innovation with this digital currency, but while they keep on ‘researching,’ this space is now talking of lego blocks of decentralized financial dapps that synergize to offer semi-banking like services.
Their pilots on the other hand have advanced to JD accepting this digital currency for payments, something so advanced as a decade ago where this space is concerned when an American sent some bitcoins to a Brit to buy some pizzas.
The pilots in this space so being far more market based and minuscule scale until proven to be safe, to work, and to have market demand.
While the pilots of this digital yuan have a bootstrapping issue, and therefore would have to be far bigger scale, because where do people get this digital currency to pay JD in the first place?
A problem that may well leave this thing into endless research and development as neither China nor any other country is quite ready for smart contract money.
They may be in maybe five years if they can come up with a design that both allows them to control the currency supply while at the same time allowing all to play on it as they currently do on defi.
Something that perhaps could be pulled off by just copying Facebook’s design, but Facebook is not the lender of last resort to a banking system that has minting rights without requiring collateral.
Making this a complex matter, still in requirement for speeding up research and development.