China’s state-owned cryptocurrency is getting ready for a November 11th launch, according to Forbes. However, this has not been confirmed yet. The Chinese central bank worked on this project for five years. In China cryptocurrency is supposedly to replace coins and bank notes.
Among the first companies to receive the currency are Alibaba, Tencent, four Chinese banks and credit card company Union Pay. Because only these companies receive the coins, they will be responsible to distribute the cryptocurrency among the population.
The coin is a Central Bank Digital Currency (CBDC). Keep in mind this is not a cryptocurrency like bitcoin and ethereum. The CBDC is working on a centralized blockchain. This also means that only identified users can use the payment system.
The Chinese CBDC can become a worldwide coin. In China it will have 1.4 billion users, and the country has plans to open the system for foreign investments as well. The Central Bank made clear that CBDC will not replace cryptocurrencies like bitcoin, litecoin and ethereum.
Food for thought
There’s enough reason to be suspicious about this move. The Chinese Central Bank hardly has access to big data about Chinese citizens. Most payments in China go through WeChat Pay and AliPay. Tencent and Alibaba own these mobile payment apps. Using the China cryptocurrency the central bank wants to regain more power over big data.
In April this year China approved 197 companies as registered blockchain service providers. Among those companies are Tencent and Alibaba. Alibaba and Tencent are both working on a cloud-based Blockchain-as-a-Service (BaaS). The two companies are also big in online payments.
On a yearly basis Alipay has more than 231 million paying clients, while WeChat Pay claims 900 million monthly paying users. Payments aren’t do only things they do with WeChat Pay and AliPay. By scanning QR-codes citizens can pay for their rides on public transit as well.
The reason why the currency would be launched on November 11th is quite interesting. On this day it’s Singles Day. That’s the busiest day of the year for online and physical retailers. Last year Alibaba made more than 25 billion dollars in revenue on that day alone.
Also published on Medium.