Sheng Songcheng, Counselor of the People's Bank of China: Bitcoin is an asset and does not have a monetary value basis

Recently, Sheng Songcheng, a consultant of the People's Bank of China, expressed his views on Bitcoin in an exclusive interview with the media. He said that Bitcoin does not have the value basis as a currency, but is a string of codes generated by complex algorithms. Unlike gold, Bitcoin itself does not have the value of natural attributes. This is the biggest feature of all virtual currencies, namely "virtuality". Whether Bitcoin can have value and become a medium of exchange depends entirely on people's trust, but it cannot be denied that virtual currency has technical value and is an asset.

As of now, there are still differences in the characterization of Bitcoin among countries. According to the "Notice on Preventing Bitcoin Risks" issued by the People's Bank of China and five other ministries, Bitcoin is currently positioned as a specific virtual commodity; the Commodity Futures Trading Commission of the United States defines Bitcoin as a commodity; the British Customs and Excise Department believes that Bitcoin is a currency; the Philippines recognizes Bitcoin as a payment system; but Sweden and Germany insist that Bitcoin is a commodity rather than a currency.

Sheng Songben himself also said: "Bitcoin will reach an upper limit of 21 million in 2140. The limited number makes it difficult for virtual currency to become a medium of exchange that is compatible with the needs of modern economic development. If it becomes a standard currency, it will inevitably lead to deflation and inhibit economic development. The money supply should be compatible with economic development."

He believes that Bitcoin is actually just an application of technology, at most an asset, not a real currency. Regarding blockchain and ICO, Sheng Songcheng believes that both technologies need to be tested in practice and the market, and should be moderately regulated but not completely controlled.

Bitcoin has soared 300% this year, and many governments around the world are studying how to regulate Bitcoin. Its price rose sharply in June, reaching a high of $3,000. Even Morgan Stanley has released a report saying that blockchain technology still has no killer application, which is a necessary condition for the technology to begin to be widely adopted. "Right now, we are still firmly in the middle stage of proof of concept."

The report said early signs suggest blockchain is a promising technology, but many major problems remain unresolved and it has not been tested at scale in complex, rapidly changing business environments.

Morgan Stanley believes that from now to 2018 is the proof-of-concept stage, 2017-2020 may be the time window for the emergence of "shared infrastructure", and 2021-2025 is the stage of rapid expansion of the asset class.