Will cryptocurrency from Beijing revolutionize global money?

Xinhua reports that the National People’s Congress (NPC) “on Saturday voted to adopt a national law on cryptography,” to take effect January 1, 2020. It “encourages and supports the research and application of the science and technology in cryptography and protects the intellectual property rights in cryptography.” Cybersecurity is one reason for the new law, but there’s another one:

One of the applications of cryptography is bitcoin and other cryptocurrencies, which were the subject of appeal from Xí Jìnpíng 习近平 last week “for greater urgency in the development of blockchain technology.” This is not a new interest: At the Two Sessions political gathering earlier this year, blockchain was what Quartz called “a surprisingly hot topic.”

The biggest blockchain project in the world? Today, veteran official Huáng Qífān 黄奇帆 gave a speech that provided details of a future digital currency issued by the People’s Bank of China (PBOC), the country’s central bank. Investor Matthew Graham tweeted a video and summary of the speech:

The People’s Bank of China has been studying DCEP (central bank digital currency) for five or six years and it is maturing. The PBOC is likely to be the first central bank in the world to introduce digital currency.

He criticized some enterprises of trying to “challenge sovereign currencies” by issuing Bitcoin and Libra. Currencies based on blockchain are separated from sovereign credit and so may affect “value stability” and wealth formation in a society.

He said, “I don’t believe Libra will succeed. For sovereign countries, the best way to implement currency distribution rights is to issue sovereign digital currencies by the government and the central bank.”

He said the significance of DCEP is that it is not a digitization of the existing currency, but an alternative to M0 (cash in circulation). He believes that “the SWIFT and CHIPS systems relying on slow technology updates and difficult security guarantees have no future.”

Blockbuster news pic.twitter.com/qJqof82PI5

— Matthew Graham (@mattyryze) October 28, 2019

Further reporting: 

• Bitcoin had a wild weekend, briefly topping $10,000, after China’s Xi sang blockchain’s praises / CNBC
• Facebook’s Libra is ‘delusional’ project that will never succeed, says prominent Chinese political figure / SCMP
• Chinese President Xi Jinping calls for more research, investment into blockchain technology / SCMP