After Trump’s tweets on Bitcoin, The People’s Bank of China comes out to the crypto scene. Yesterday, the regulator published an article on the official website that reveals the concept of Bitcoin, its operating mechanism, and the history of one. The document ends with the announcement of a Libra project from Facebook.
Yesterday the #BankofChina posted up an article about #Bitcoin. They explained how $BTC works, why the price is going up, and why it’s valuable. Never thought I’d see that happen. 😅 #Bullish pic.twitter.com/GKzj7XJjJa
— Samson Mow (@Excellion) July 27, 2019
The People’s Bank of China also paid attention to issues related to the Bitcoin’s rate, namely its limited issue. Recall that the limit of Bitcoin’s supply is 21 million BTC only and the last block will be mined in 2140. Among other factors pushing the price up are a growing mining complexity and a means of value saving.
Another positive point noted in the article is a more comfortable usage of cryptocurrency as a global tool for global remittances.
The regulator also warns users about the risk of speculation and the lack of security of cryptocurrency funds. As an example, the history of hacking of a currently defunct cryptocurrency exchange Mt.Gox.
The Development of The Digital Yuan
Historically, the Chinese authorities were opponents of cryptocurrency, banning both the operation of cryptocurrency exchanges and ICOs inside the country in 2017. At the same time, cryptocurrency storage is no prohibited in China.
Bitcoin demonstrates all the characteristics of a safe asset and attracted the attention of many investors.
Also, interest in the market is growing against the backdrop of the expected launch of Libra digital currency from Facebook.
But, according to the former governor of the People’s Bank of China (PBoC) Zhou Xiaochuan, the concept of a global digital currency that can be exchanged for fiat, which Facebook introduced, threatens existing cross-border payment systems and may weaken the position of sovereign currencies.
According to him, the Chinese authorities need to strengthen the national currency and consider the Hong Kong model to create a digital yuan, which involves the issuance of money by commercial enterprises under the supervision of the regulator.
Earlier, head of the research bureau at the People’s Bank of China Wang Xin expressed concern about the observed dominant role of the US dollar in the basket of currencies with which Libra should be supported.
He also said that the central bank has already received permission from the authorities to develop its own digital currency, but he did not specify at what stage this process is.
Changes Are Possible in The Cryptocurrency Space
It is too early to talk about something major, further developments are interesting in any case. Part of the Chinese regulators positively reacted to the ban on cryptocurrency and are ready to launch the digital yuan, while the rest of the world is getting ready to accept Bitcoin sooner rather than later. And the Asian giant can’t afford to stay away from innovation.
If we assume that China prefers to regulate Bitcoin and not prohibit the cryptocurrency world will face big changes. China was a cryptocurrency superpower when yuan trading was allowed.
Therefore, a renewal of the same state of affairs may cause a rise in the rate of Bitcoin. On the other part, it is not known whether to expect any changes if it is worth when.
For now, the Chinese government will announce what is happening and it is not worth waiting for real changes in the cryptocurrency space.