China's official electronic currency VS decentralized Bitcoin

Recently, the People's Bank of China announced on its official website that it plans to issue an official digital currency.

To break down this blockbuster news from China, Coin Telegraph polled industry experts to get their thoughts on the move and their predicted impact on the cryptocurrency market.

Official currency or encrypted digital currency?

If the People’s Bank of China does issue its own digital currency, is it still essentially related to encryption technology? Can a centrally issued virtual currency still be compared to encrypted digital currency without the involvement of a third party?

Tone Vays of the BraveNewCoin research team believes that the People's Bank of China's move has nothing to do with encrypted electronic currency.

He said:

“The People’s Bank of China already has a digital currency – the renminbi. If a digital currency is issued, the only difference is that there is no physical form of currency. This digital currency obviously has nothing in common with Bitcoin, nor can it be compared to the existing application of Bitcoin blockchain technology – permissionless value transfer.”

Jeffrey A Tucker, Honorary Fellow of the Foundation for Economic Education, also expressed his views:

“The government’s desire to issue cryptocurrencies is a bit like the post office wanting to launch its own email service in 1995. They can certainly implement these ideas, but it is obviously very challenging to get people to choose centralized public goods in a decentralized market. I think it is not the responsibility of the People’s Bank of China or any other central bank to issue digital currency.”

Manie Eagar, founder of Blockchain Labs, added: “As central banks see the role that Bitcoin and other cryptocurrencies play in the market, they are most concerned that they will not be able to control these cryptocurrencies, so they want them to be taxable, regulatable, more transparent, and so on.”

An improved version of centrally issued virtual currency?

So, will this centrally issued virtual currency be more efficient than the currency issued through the traditional banking system?

Patrick Dugan, one of the board members of the Omni Foundation, believes that this digital currency has all the flaws of traditional currencies, except for the potential to increase transaction processing speed:

“The Chinese economy should continue to perform well and remain large, so the People’s Bank of China’s plan is a very striking demonstration of the importance that such government organizations are taking to blockchain technology. I think this digital currency has all the disadvantages of traditional currencies, except for the possibility of increased processing speed.”

Jure Pirc, president of the Slovenian Bitcoin Association, said: “If a country’s national bank can accept blockchain technology and issue its own cryptocurrency, it will be a step in the right direction. The prerequisite is that the ledger is public.”

Regarding the government’s claim that Bitcoin facilitates money laundering and illegal organizations, Tone Vays of BraveNewCoin said:

“Preventing money laundering has become a common refrain for indebted Western governments to ensure that no tax is missed or, in other words, to confiscate people’s wealth to maintain power. Bitcoin weakens their ability to enforce financial regulations, which is why Western governments will never adopt blockchain technology unless there is a repeat of the 1930s-style Great Depression.”

A threat to Bitcoin?

Finally, does a virtual currency centrally issued by a country pose a threat to cryptocurrencies?

Simon Dixon, CEO of BnktotheFuture.com, thinks this is unlikely. He explains:

“Cryptocurrencies don’t need government help to work effectively. Quite the opposite. Bitcoin works effectively because it is not issued by an official, but controlled by algorithms and codes. There is less room for corruption than for government agencies to constantly make regulations and bend the rules of currency to support a certain agenda.”