The China Finance 40 Group meeting took place, and the country will soon roll out its CBDC ( Central Bank Digital Currency). Mu Changchun, the Deputy Chief in Payment and Settlement Division of People’s Bank of China made this announcement.
PBOC’s Money and Research Group stated that the prototype of Central Bank Digital Currency exists in the system, and the team has been working on it. They added that they have fully adopted the blockchain technology for the currency. The operational framework adopted for the currency will be of the two-tier system because of the large population and complex economy in China.
The currency has been in the development phase and research phase since 2014. After 5 years of being in the research and development phase, it can be said that finally, the currency is ready to be launched.
During the meeting, the Union Pay Chairman, Shaofu Jun felt that even though the initiative for digital currency can solve the problem of cross border transactions. The point that it is a centralized digital currency might not help them with the purpose of solving the problem of working with the regulatory framework of other countries.
The reason why people prefer using Bitcoin is that its decentralized, which means there is no control of any higher authorities such as a bank or government over it. The transactions are fast.
Centralization vs Decentralization
We have heard these terms several times whenever we talk about bitcoins or any other cryptocurrency. Centralization refers to the power and authority of taking controls of things and reporting to the superiors.
On the other hand, as the name suggests, Decentralization means the dissemination of all the departments that are present and working as an individual and making things work.
Decentralization: The motive behind Bitcoin
When bitcoin was launched, it was launched as a platform for people to trade and pay for the services they use, using Bitcoin. As its popularity increased, people began to use this as a platform for investment.
The motive behind the launch of bitcoin was to provide people with a decentralized currency that will be accepted all over the world by people. They wished for a platform that will help take care of the multi spending problem with the help of blockchain. The currency has the base of cryptography, which made it secure and unaltered through the digital transactions.
Bitcoins were used as a good way of payment for the services that were being used by the people. Businesses were accepting bitcoins as a form of payment, and this made things easier for those who had bitcoins.
Bitcoin vs Central Bank Digital Currencies
Central Bank Digital Currency is a digital currency initiative that is taken by the PBOC, but this not exactly the right way for things to be done. Launching a digital currency under a banking service and claiming it to be “decentralized” is not the truth.
The whole essence of decentralization gets lost when there is a governing body involved. People are still supporting Bitcoin in China, and with the launch of this, people might decide to shift to the banking sector again.
We are a few weeks away from the launch of Central Bank Digital Currency, and we can only wait and hope for the best outcome from its launch.