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China Bitcoin Government The Almighty Buck

Why China Undermines Bitcoin - as It Tests Its Own Digital Currency (theguardian.com) 86

The Guardian's UK/US site editor in the Asia Pacific timezone argues that China wants to undermine bitcoin because, behind the scenes, its reserve bank wants to set up its own digital currency — and then reboot the international financial system: The People's Bank of China aims to become the first major central bank to issue a central bank digital currency. While the PBOC's counterparts in the west have taken a more cautious approach, it has held trials in several major cities including Shenzhen, Chengdu, Shanghai and Hangzhou. The benefits of an e-currency are immense. As more and more transactions are made using a digital currency controlled centrally, the government gains more and more ability to monitor the economy and its people.

The rollout is also seen as part of Beijing's push to weaken the power of the U.S. dollar, and in turn that of the government in Washington... Alarm in western governments is such that the threat posed by the digital yuan, which could put China out of reach from international financial sanctions, for example, was discussed at last month's G7 meeting.

There's additional reasons for China's desire to replace bitcoin with its own currency, various experts tell the site. No central bank relishes the thought of a "parallel currency" — and there's also concerns about consumers being hurt by a lack of regulations, as well as the strain crypto-mining puts on the nation's electricity system. But the Guardian also adds that "The threat of an unregulated alternative monetary system emerging from blockchain technology is a clear and present danger to the Communist party, according to observers."

"Jim Cramer, a former hedge fund manager and CNN business expert, said the government in Beijing "believe it's a direct threat to the regime because... it is outside their control".
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Why China Undermines Bitcoin - as It Tests Its Own Digital Currency

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  • by mccalli ( 323026 ) on Monday July 12, 2021 @06:44AM (#61574595) Homepage
    I don't understand this concept at all. Surely 'they' (all central banks, not just China) already have a digital currency, and that's the currency that is officially in use within that country. Yep in some cases that's plural, for example onshore/offshore, but the basic point remains - all currencies are already digital, so what do they mean by this?
    • by Entrope ( 68843 ) on Monday July 12, 2021 @07:26AM (#61574699) Homepage

      I think the main distinction is who keeps the ledger: Is it largely decentralized like in the US banking system, where large banks work out direct settlement protocols to balance their books, or is it centralized like Bitcoin's primary ledger (except PBOC as the authority)?

      Bitcoin balances the risks inherent to a central ledger by combining strong incentives for lots of people to copy it with a proof-of-work mechanism for extending the ledger. Centralizing changes to the ledger, which is presumably a major feature of the Chinese system, removes those compensating controls and leaves the risks.

      • by vivian ( 156520 )

        If you are a centralised authoritarian government who wants absolute control of a digital currency, why on earth would you need a blockchain based currency? It makes no sense. better to just have all transactions validated (and logged) on servers you control without all the mucking around with proof of work, etc.

        • by IdanceNmyCar ( 7335658 ) on Monday July 12, 2021 @07:56AM (#61574773)

          It's not a blockchain currency which is why they say digital currency and the generally misconstrued hatred of blockchain as purely a means for crypto currency is something most Chinese tech sees beyond. they are developing the technology and software but not for currency.

        • Comment removed based on user account deletion
      • by rtb61 ( 674572 )

        Ding bat. The Chinese digital coin will be backed by the total capital worth of the country. Bitcoin is backed by nothing but bullshit. Why the hate for the bullshit coin because it will damage the value of the Chinese government digital currency which is backed by the value of the entire country. Not to forget the giant ponzi scheme that is bullshit coin 'er' bitcoin.

        How the fuck can you not see that difference. Unbacked make believe money versus currency BACKED by the worth of an entire country. Ohh you

    • by MobyDisk ( 75490 ) on Monday July 12, 2021 @07:59AM (#61574781) Homepage

      I came here to post the same question. I found this article [cnbc.com] which makes it sound like a normal debit card system like most of the world has already. People deposit money into the bank and they get "digital yuan." It sounds like China doesn't like AliPay and WePay dominating the payment market and is making their own. But the article's author sounds like they have never used a credit card or debit card in their life and can't seem to explain how this is any different. Yet they keep treating it like it is a new currency instead of just a payment system. Maybe there is something more I'm not understanding?

      • Credit cards have huge fees only hidden by government corruption.

        At first letting them get away with collusion and forcing merchants into contracts which don't allow them to discriminate with fees. Later actually stepping in and "protecting consumers" by making it illegal to discriminate with fees. They have now even bought enough EU politicians to run the same racket here.

    • by Pinky's Brain ( 1158667 ) on Monday July 12, 2021 @08:48AM (#61574947)

      It means peons can have a zero counterparty risk account with the central bank and use it to make electronic payments. Potentially with zero fees.

  • Now is the time between them not being allowed to mine bitcoins and them hoovering up every new graphics card to mine their Chinacoins.

    • by GameboyRMH ( 1153867 ) <gameboyrmh@@@gmail...com> on Monday July 12, 2021 @07:25AM (#61574693) Journal

      You can bet your ass Chinacoins would not be a cryptocurrency, but a traditional digital currency - that is, centrally controlled and highly efficient.

      I'd like to imagine that the reason Western governments didn't instantly squash cryptocurrency like a particularly creepy bug, as per tradition with any online payment system of any kind that wasn't locked down tight as a Paypal account, is that they saw it as the lesser of two evils compared to Chinacoins and thought it could buy them some time, but it was probably just Trump administration incompetence/criminality (plus a slight lack of vigilance on the part of the Obama administration for failing to catch it early on) creating a rat race to the bottom in which other governments also failed to act, afraid to miss out on potential profits the US could reap.

      • I'd like to imagine that the reason Western governments didn't instantly squash cryptocurrency like a particularly creepy bug, as per tradition with any online payment system of any kind that wasn't locked down tight as a Paypal account, is that they saw it as the lesser of two evils

        I'd like to imagine the reason Western governments -- particularly the United States -- didn't instantly squash cryptocurrency is because they lack the authority to do so. Unlike some authoritarian regimes, in the US (at least

        • LOLWUT? Every other payment system, such as Paypal, is mummified in red tape, laws that the US government put in place because they damn well have the authority to do so. They can keep you from buying a foreign van that doesn't have X number of seats in it, so you bet your ass they can control where and how and to who you send money to overseas. That's why international sanctions are more than just strongly worded letters.

          • LOLWUT? Every other payment system, such as Paypal, is mummified in red tape, laws that the US government put in place because they damn well have the authority to do so.

            I didn't say the process is perfect, and I did point out it's frequently abused. In PayPal's case, it's a US-based company and thus subject to US finance laws. This is a poor analogy to cryptocurrency.

            They can keep you from buying a foreign van that doesn't have X number of seats in it

            A van, being a physical asset that must be imported, i

            • This is sovereign-citizen level pseudolaw. The US could ban you from using your US credit cards, bank transfers etc. to do transactions with anything that touches BTC and could theoretically make it a crime to do any transactions in BTC just as it's a crime perform transactions with certain terrorist groups. Somalian pirates probably claim to be nationless too, but good luck doing any transactions with them either.

    • by Junta ( 36770 )

      The computation/energy intense facet of crypto currencies are to facilitate the goal of decentralized operation. China has no interest in a decentralized currency nor do they want to waste resources they don't have to.

  • If China can get its solution out quickly then it will be well placed to become the de-facto digital currency provider/solution. Once there then it will be in a position to control or at least see how funds flow around the world. That will give it knowledge and power.

  • by OpinOnion ( 4473025 ) on Monday July 12, 2021 @06:58AM (#61574627)
    There's no real advantage. Right now the biggest use of Bitcoin for a normal person is simply that it's an easier version of Western Union. For the average consumer it has no currency potential Even years later with a much higher market cap. There's no meaningful amount of retailers that accept it and It's not a problem with adoption It's simply a problem with the fact that people have no actual use for another currency, Especially one that requires the internet and is fairly complex to set up from an e-commerce perspective compared to other payment systems. One of the big benefits of a credit card is the fact that there isn't real money on the card. That's why debit cards kind of suck and why anything like Bitcoin kind of sucks. You giving up one of your biggest security buffers and You're getting almost nothing out of it. It's also horribly inefficient when it comes to electricity and it's way way too easy for any country that just decides it doesn't like Bitcoin to start blocking the whole network in their country which means all the sudden you lose access to your money. You have to realize the only reason Bitcoin is still around is cuz the banks allow it to be around and the only reason they allow it to be around is cuz they don't see it as a threat. If the bank saw Bitcoin as a threat they would have easily legislated it out of existence. Even if Bitcoin was more robust and widely accepted I still don't see the actual need or benefit for all that complexity Just to essentially create a far less secure version of a credit card. I'd rather pay the fee on the credit card to not have to worry about moving real money around and having access to credit.
    • by gweihir ( 88907 )

      Have you seen how incredibly slow BTC transactions are (unless you pay a lot)? I would say Western Union is quite a bit superior.

  • by Ritz_Just_Ritz ( 883997 ) on Monday July 12, 2021 @07:02AM (#61574633)

    My guess would be the primary cause of heartburn for the CCP is the fact that bitcoin is an efficient way to exfil capital from China. It has been tolerated because corrupt officials and their ctonies are the enabling its existence in China and are the primary beneficiaries, but after squirreling tens of billions of dollars (or more) out of the country, they're trying to stuff that genie back into the bottle.

    • Because China is smart. Visa, MC and PayPal etc hoover/ rake-off 3.5% odd on every transaction. If CCP would bring that down to 1% they could really clean up big. Bitcoin or whatever has FAILED the 2% test, plus it is traceable, mostly. Plus the money out could be turned off if USA demands it. So to generate an internal digital means is a smarter play, but because of trust issues, it would have to have a lower rake-off tax, and not use it to punish those who have more than explainable. There are ways to so
      • by Hmmmmmm ( 6216892 ) on Monday July 12, 2021 @08:48AM (#61574949)

        The CCP digital currency is going to be basically TRANSACTION free. It's the equivalent of basically using cash in your wallet. That's why banks and credit card companies, etc. are scared as fuck about digital currency because it has the potential ability to cut them out. Why deposit money in a bank if you can just deposit it in a digital wallet that is just as safe. Banks deposits before served a purpose because no one wanted to hoard their money between their mattresses, and no one wanted to carry a wad of cash to do a transaction. There was also the idea that they would provide interest, but with interest close to 0%, much below inflation, does that continue to serve a purpose?

        • Not only do bank deposits pay very close to zero for interest, but on the credit card side of the house, they continue to charge usurious interest rates for anyone who allows themselves to go into debt with their card. Charging 15-25% APR for interest on credit card balances when the cost of funds is practically zero is pretty hard to defend. Some premium to make a lender whole in the event of fraud is one thing, but 15-25% is scandalous.

          Personally, I just pay my full balance every month, but it is an eas

        • > Why deposit money in a bank if you can just deposit
          > it in a digital wallet that is just as safe.

          Well, for starters we don't know for sure that it IS safe. In fact, it's not. Remember the gas pipeline ransom paid in bitcoin that was almost immediately recovered by the FBI? Bitcoin wasn't exactly safe a month ago when that happened, was it? Nor is it cash-equivalent when the feds can track your every bitcoin transaction and simply take your bitcoin away remotely if they feel like it. Plus, there

  • They will tell us that the Chinese central bank is pure authoritarianism in issuing electronic money and enforcing and controlling everything their cities buy and sell with it. And when people get their digital account zeroed because they made fun of their president, we will be told how draconian and terribly dictatorial that regime is.

    And then we get the exact same thing in the West, with the exact same controlling and monitoring all buying and selling of all citizens, but it will be the paragon of freedom

    • I would say that we already have that here in the West. Effectively its the same thing, since the Dollar basically exists only as a spreadsheet in the Fed.

      • Yes and no.

        Concerning inflation, yes. They can simply produce trillions of dollars out of thin air just because they want to. And it will be unamerican to disagree with that if the red troupe is in power, or white supremacist if it's the blue period.

        But they cannot yet control or interdict all transactions between everyone, nor can they render a dissident poor through cliciking a simple button. People can still trade untraced goods in untraced cash notes with known dissidents or save cash in their piggy ban

    • Comment removed based on user account deletion
      • by phoenix321 ( 734987 ) on Monday July 12, 2021 @11:08AM (#61575415)

        Very rich response coming from the nation with the most incarcerated people per capita. Really. The land of the free. Marijuana an essential business to open during the pandemic, yet millions in jail for selling it a few years earlier. Really. Lecture me about freedom.

        We don't "tut-tut actual white supremacists on Twitter", we "tut-tut" about 80+ million people (some of them supremacists) that disagree with one point or another of the Democrat party. And "we" don't do that, the operators of a lot of platforms do. And they don't "tut-tut actual white supremacists on Twitter", they purposefully and exhaustively deny people basic freedom of expression and political representation, up to and including basic Internet access and basic bank accounts for the misdeed of "not censoring enough disagreement with the Democrat party".

        That, and bashing their head in with skateboards and hardened steel bike locks for the crime of wearing a red basecap in public.

        Thank you for proving beyond a doubt that you and your group *will* definitely try to remove the digital money from "actual white supremacists" and whoever you label as such, when your group gets the opportunity to do so. You will do that and you will be proud of it. And you will lump "critics of censorship" and "first amendment defenders" with "actual white supremacists" and defend any action neccessary to silence them all, however extreme that may be. You will never criticise the treatment of "actual white supremacists" or disagree with the ever widening definition of it.

      • Ah yes, the "violent" lego insurrection. Where the only person to die was killed unarmed by a Lt in the capitol police, the same Lt who years earlier decided it would be a good idea to leave his sidearm in the bathroom. Yeah. That incompetent asshole. While the House leaders lied about the events of the day in their 2nd impeachment attempt since it was PUBLIC KNOWLEDGE(Per an interview with a family member by Propublica) by Jan 8th that Officer Sicknick had not been injured in the "insurrection" and the FBI

  • Like all monetary systems, a cryptocurrency is simply made up
    - and in the case of cryptocurrency, the medium of exchange has no underlying value/usefulness (as opposed to e.g. gold).

    Therefore it is natural that any government with an already functional monetary system will not adopt an existing cryptocurrency - because as such, they would just be paying to buy into someone else's made up value. Instead, that government can just create their own cryptocurrency - and mandate that it is the only legal

  • by TJHook3r ( 4699685 ) on Monday July 12, 2021 @08:43AM (#61574939)
    I suspect that China is more than slightly interested in stopping corruption and see ending unregulated coins as a way of doing that. In much the same way that India demonetised 500 and 1000 rupee notes in an effort to hit those taking bribes and using the black market. Just to add, is it just me that finds tech sites running endless articles about crypto speculation annoying? It's not 'news for nerds', it's fuel for gullible investors!
  • In actual reality, the Chinese just see that BC is killing their electrical infrastructure and, besides, is a very bad idea anyways. They also see what anybody halfway competent sees: It is slow, it is insecure, it is purely used in a Ponzi-like fashion, and all potential advantages will go away once it is fully regulated (and it will be).

    Seriously. Stop the pumping. Have you not defrauded enough people?

    • And you think China's crypto currency won't have the exact same problems? Even worse it is controlled by a fascist government who is actively trying to use money as one of many ways to control it's population and to exert control over other countries economies. Your argument isn't a strong one.
      • by gweihir ( 88907 )

        China will not have a crapcoin of their own. At least not anything beyond a meaningless stunt. You are stupid and fell for the propaganda.

  • It's about who can print new money. CCP is either able to print new money from nothing, or has already minted a reserve.

    This is all I have to say about Jim Cramer: https://www.youtube.com/watch?... [youtube.com]

    • False, only delusional cryptocoin shills are thinking that. Energy load and crime are the only concerns, since bitcoin isn't money just a gaming/gambling token. It is no threat to money, isn't a substitute for money.

  • by Malifescent ( 7411208 ) on Monday July 12, 2021 @12:55PM (#61575873)
    Trying to undermine the U.S. dollar is a very dangerous thing to do! I know for a fact that the U.S. is willing to wage war to protect the hegemony of the dollar, as it's the basis of its economic wealth and dominance.

    If this has the desired effect I wouldn't be surprised if U.S. warships show up on China's doorstep.
  • by ukoda ( 537183 ) on Monday July 12, 2021 @05:26PM (#61576521) Homepage
    As someone who, pre-Covid, visited China often the digital payments via WeChat are really handy but are also a warning of why to never trust Chinese controlled transaction systems. Having gone thru the huge hassle of opening a bank account in China just so you can put money into WeChat it opens up an easy way to buy stuff while in China. Fast forward a year and it suddenly stops working with a demand I visit the appropriate authorities to have my identification checked. All very normal stuff when you live in China but also typically unnecessary. They had already seen my passport and visas etc at the bank not long ago. There was less than $100 balance and only routine small transactions from food vendors and the like. Basically it was totally unnecessary to block my account and force my verification. However if you spend enough time in China you know this is all very normal and they do things just because they can since they are not accountable.

    The lesson here is not to trust any digital currency that the Chinese government can control. Your access to your funds could be blocked for no reason and there will be no way to recover them.
  • Why is the article conflating blockchain with digital currencies? They literally have nothing significant to do with each other & blockchain is unlikely to ever be a viable alternative, i.e. competitor, to digital currencies. Stop calling blockchain a currency.
  • I'm not particularly interested in such cases in China. I get a good passive income thanks to bitcoins. It's just that initially I chose a good broker and now I am engaged in trading. If you want to do the same thing, then you need to read more info [fxstreetlive.com] on the site where you will find reviews on various brokers.

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