China’s Cryptocurrency Legitimate Threat to Bitcoin and Dollar
Many market analysts believe that China’s own cryptocurrency is a legitimate threat to bitcoin, and even the United States dollar. As part of the country’s effort to streamline its financial industry, China recently rolled out its own digital currency.
China is not a stranger to digital currency. In fact, the country has one of the largest and fastest adoption rate of digital payment systems. It is relatively easier to do financial transactions in the country when using platforms like WeChat Pay and Alipay. It also helps that these platforms are available on almost any smartphone in the country.
Seeing the potential of digital currencies, China recently started its own digital currency. While still in its development phase, the country started a limited pilot program of the project in order to gauge its performance. People with insider information about the project claims that China plans a massive rollout of the project at the 2022 Winter Olympics in Beijing.
A run for their money
Considering China’s massive consumer market, many analysts believe that the country will face no hurdle in the adoption of digital currencies. Chinese consumers have already proven the effectiveness and relative ease of using digital currencies with platforms like Alipay and WeChat Pay.
What China is doing right now is create its own platform using its own currency, rather than relying on third-party tech companies to do so. The main difference with what China is doing with that of Alipay is that the latter still needs to swap actual money into digital credits.
By turning its currency into digital, it will allow people to do financial transactions easier and quicker. This will also allow the Chinese government to regulate its currency to a certain degree that is not possible if they are using actual physical banknotes.
Although it is safe to say that it will still take China years to implement its new digital currency, the threat is already too big for the United States to just shun it away. Financial experts think that this new digital currency poses a great threat to the financial dominance of the U.S.
Experts believe that China can implement its digital currency locally within its borders with ease. However, the main threat happens if other nations and financial institutions allow this digital currency to cross borders.
Right now, the global trade currency is the U.S. dollar. If China’s digital currency rolls out of its borders, traders can essentially buy and sell products without using the dollar-based payment system. This is the threat that many experts agree on.
While bitcoin has the capability of challenging China’s digital currency, it does not enjoy the backing of a sovereign state. Essentially, bitcoin is just a bunch of codes that happens to have value. What China is trying to implement is an actual currency that can be digitally managed.
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