China’s Ambitious Answer to Bitcoin!
If there’s to be a war between the US and China, it will be fought in the financial markets. The dollar has the high ground against the renminbi right now, but the second-largest economy on Earth is planning a digital sneak attack.
China’s central government realizes that money is a waste of paper, so it’s designing a digital version of the renminbi so that citizens never carry cash again. The digital currency is stored in a digital wallet. It’s quicker, easier, more hygienic than physical coins and notes, and the average Chinese consumer loves fintech. This could be a home run!
The trade here is short Chinese big tech and long cybersecurity. Alibaba and Tencent drive the payment apps that drive a fifth of China’s gross domestic product growth. The state wants to take back that power to avoid a “winner takes all” monopoly.
In terms of long-term security, this country’s will to be the global leader in digital currencies will be an issue for the greenback. If cross-border transactions are possible with the new digital currency, those dealings will be out the view of the rest of the world. This could undermine global commodities being priced in dollars, like oil and steel.
China itself should have no problem with security, though, and that’s another big appeal of the idea. Traceable digital transactions make the social credit system easier to enforce, a system that rewards “virtuous” behavior and spending habits with extra life privileges.
The digital currency doesn’t have a name yet, and we don’t know which lucky financial giant has won the contract for its development. The authorities refuse to call it crypto and it’s still a way off; a massive test is being planned for the 2022 Beijing Winter Olympics. Nevertheless, it’s about time the United States got started on a competitor, just in case!