Chinese virtual currency: Central bank release, Alibaba and Tencent push, Facebook’s ability to handle transactions many times Libra

The virtual currency race of the big companies in the world

According to Paul Schulte – former Head of Global Financial Strategy of China Construction Bank (China Construction Bank – CCB), the world’s second largest corporations in the world will participate in the virtual currency project, including: China Construction Bank, Industrial and Commercial Bank of China (ICBC), China Bank (Bank of China), Agriculture Bank of China, two corporations China’s largest technology is Alibaba and Tencent, and the Union Pay Group.

A large Chinese economic group will also participate in this virtual currency project, but their names are still in the secret.

These economic groups have been collaborating on developing China’s own cryptocurrency technology since 2018 and the new currency could be released in November this year. The identity of this currency has not been announced.

The new virtual currency will follow a set roadmap. Economic groups are responsible for bringing virtual currency into circulation in the mainland market, while ensuring the balance of payments between the renminbi and the new virtual currency.

Chinese authorities want Alibaba and Tencent to push people in Asia and North America to use Chinese cryptocurrencies.

This is a counterbalance project for Facebook’s virtual currency project Libra. The virtual currency belongs to the capitalist world that has attracted the support of central banks and companies such as Mastercard and Uber in the United States, Vodaphone in the UK and Mercado Pago in Argentina.

In addition to Libra, in August 2019, Bank of England Governor Mark Carney also proposed the idea of ​​a new currency backed by a number of national central banks to replace the US dollar in the basket. Global reserve currency.

Will the new virtual currency be better than Libra?

Compared with the above two virtual currencies, China’s new virtual currency does not need indirect support from the state power, but China’s central bank will be the first bank in the world to issue virtual currencies.

In a speech at China Finance 40 Forum on August 10, 2019, Mr. Mu Changchun – Deputy Director of Payment Department of People’s Bank of China (PBOC) ) revealed about a “two-tier system” in managing new virtual currencies in China.

Accordingly, the central bank will create and manage virtual currencies, while the business partner group will buy all of this virtual currency and distribute them to the market.

In addition to blocking regional banks, experts rated the two-tier system designed to “restrain” other digital assets and strengthen China’s national currency sovereignty.

They ensure the central bank maintains monetary policy control, increases the ability to use currencies in the market, and encourages competition among cryptocurrency recipients.

There are two important differences between Chinese virtual currencies and other types of virtual currencies in the world.

The first difference is the ability to process transactions. Chinese banks studied the number of internet transactions in China in November 11 alone and found that more than 90,000 transactions occur every second.

Thus, even the Libra could not meet the trading needs of the Chinese people in time. So they decided to increase the processing speed. China’s new virtual currency can handle more than 300,000 transactions per second.

The second difference is the supply, instead of using an algorithm to limit the supply like Satoshi Nakamoto’s Bitcoin, the new virtual currency will be controlled by the central bank of China.

The government hopes the new virtual currency will replace coins and checks (physical notes) in circulation and stabilize China’s financial market, which is suffering many disadvantages in the US-China trade war.