Why is China investing in blockchain technology
Wed, 26 Feb 2020, 07:03 am UTC
China is one of the leading countries when it comes to crypto and blockchain, and the country has many reasons why it invests in these technologies.
China President Xi Jinping has urged the people to take advantage of blockchain. Meanwhile, the officials at the Chinese Communist Party (CCP) understand that blockchain is a popular technology and although its applications are limited they can redirect it toward their goals, Byrne Hobart wrote for Asia Times.
The country can use a blockchain-based title system to solve a major problem in lending. At present, the borrowers can reuse the same collateral and it would not be known until they start to default and more than one lender attempts to seize the same property.
According to Celine Chen of Plug and Play, traditional banking has become obsolete. The automated, decentralized system offered by blockchain lending can reduce operational risks and speed up the loan process. It can also help lending firms avoid a financial crisis. Overall, blockchain presents “trust, reliability, and confidence to the complex lending process.”
Also, if China wants to de-dollarize its economy, it would spark panic, not to mention, getting rid of dollars can be expensive and inconvenient. However, it can use blockchain, a modern and decentralized system without triggering panic. Instead, using blockchain would give the impression of “openness and progress.”
China is set to launch its digital currency electronic payment (DCEP) this year. However, a new report suggests that it might be delayed due to coronavirus.
"The coronavirus outbreak has led to postponed work resumption in government institutions, including the People's Bank of China (PBC). Policymakers and research staff involved in the DCEP project are no exception, which weighs on the development process," a source close to the matter told Global Times.
Meanwhile, Bank of England chief cashier Sarah John encouraged the central banks to consider digital currencies. She said that it is crucial for banks to consider it before tech giants dominate. Facebook is already planning to launch its own cryptocurrency called Libra.
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