Chinese New Year (Lunar New Year) has a strong influence on cryptocurrency prices, with Bitcoin prices decreasing in the months leading up to the New Year. This article examines the trend and the possible reasons why it happens. Chinese New Year is celebrated on a different day each year as it is based on the Lunar Calendar.
This year, Chinese New Year will begin on 10 February and end on 13 February. During this time many Chinese Over-the-Counter (OTC) services will be closed – leading to high crypto volatility.
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*Data based on Bitcoin Prices on CoinGecko. Pre-CNY Highs taken as average candle price up to 7 days before the New Year.
This period is a public holiday in China, as many employees make the annual trip back to their hometowns to celebrate with their families. With a population of 1.386 billion, this represents the largest short-term migration in the world. During this time, I also came across some fascinating information about the best Plinko gambling sites, which offer unique and engaging gaming experiences for enthusiasts. All factories in China close during this period, with operations frozen for up to 2 weeks as logistics companies and suppliers slowly open up. Chinese New Year is also celebrated in other Asian countries such as Hong Kong, Singapore, and Korea (Korean New Year). China will also be rolling out a feature allowing people to send red packets containing its digital currency eCNY/DCEP. However, it’s important to note that during this time cryptocurrency exchanges will still operate and facilitate trading around the clock.
Chinese New Year Dump in 2019, 2020, 2021, 2022 and 2023?
Bitcoin prices would almost always drop in the weeks leading up to Chinese New Year.
For example, in 2019, Bitcoin prices dropped steadily from $3,491 right before the Chinese New Year to lows of $3,397 during the holiday.
In 2020, prices fell below the USD$8.3k resistance before Chinese New Year. There was a recovery back to USD$8.5k on the first day of the holidays. However, history cannot help but repeat itself, and within the same day plummeted back below USD$8.3k. Prices then remained stagnant and only made a marked recovery on the last day of the holidays.
In 2021, the tides seemed to have turned with a gradual increase from $32k to $39k in the first week of February, and a huge 2-day rally up to $48k in the few days leading up to the festival. However, during Chinese New Year, prices still began retracing to $46.2k. Fortunately, this did not wipe out the pre-Chinese New Year rally.
2021 Chinese New Year Bitcoin prices (Source: CoinGecko)
In 2022, prices took a sharp nosedive to sub USD$37 levels just before the holidays. Bitcoin prices then rose sharply towards a peak of over USD$39k midway through the Chinese New Year holidays. However, this euphoria was short-lived, and prices took a steep tumble to USD$36.5k on the last day of the Chinese New Year holidays. Essentially undoing the initial price rally a few days prior.
In 2023, prices pumped 1 day before the new year, ringing in a high of US$23,282.40 on the 1st day of Chinese New Year. Prices fluctuated between the US$22,500 and US$23,000 range during the duration of the holidays. However, ultimately closing at US$22,437.68.
Why do Bitcoin prices dump during Chinese New Year?
Decrease in Trading Volume?
Data compiled by CoinDesk Research shows the trading volumes on Binance, Huobi, and OKEx –the most popular cryptocurrency exchanges catering to Chinese customers – were down during the Chinese New Year period. A decrease in trading volume can also be seen during October each year when Golden Week (a 1-week celebration for National Day) in China takes place.
When large numbers of highly leveraged traders all bet on Bitcoin prices moving one way it creates an opportunity for other large investors (whales) to move prices in the other direction. Doing so triggers a cascade of liquidations, sending Bitcoin’s price into free fall and creating huge paper losses for leveraged long traders. The whales are then free to “buy the dip” at the expense of “rekt” traders.
Market Makers on Holiday
It is no secret that market makers and trading bots operate in the Cryptocurrency market – in fact, they are responsible for a portion of the market volume. Market makers located in China and other Asian countries will shut down operations for 3-5 days due to public holidays. Even though market making can be automated by trading bots and algorithms, it still requires humans to watch over the daily operation to make sure the is no malfunction.
During the Chinese New Year, market-making operations will be limited in capacity. This leads to more volatile and less liquid markets.
Cashing out for the New Year
One of the possible reasons for the dip in Bitcoin prices is that people are “Cashing out” for the holidays. This is especially true in China because, during the festival, lucky packets packed with cash are traditionally given out to children and the elderly. These “red packets” are meant to symbolise luck and prosperity and is the only time when giving cash is not taboo in China.
Tradition dictates that married couples should give out red packets to young unmarried children, elderly and service personnel. Company Executives and managers should also give money to their subordinates – with some packets being filled to as much as the employee’s monthly wage.
Due to the huge amount of cash money required, some suspect that this tradition is responsible for the increase in Bitcoin Sell orders before Chinese New Year.
Chinese OTC Volume Drops
Bitcoin is traded in China via Over the Counter (OTC) desks. These OTC desks match orders from buyers and sellers and can offer escrow services. Top desks include Binance OTC and Huobi OTC.
Chinese New Year 2024 Bitcoin price predictions?
This year, Chinese analysts are already looking into the future and are optimistic for Bitcoin prices in the month after the Chinese New Year. They note that Bitcoin prices have generally gone up in the month after Chinese New Year. For example, in 2023, Bitcoin prices went up by 11.15% in the month after the new year, 13.9% increase in 2022, and 30.18%(!!) increase in 2021.
Prices have already been on the rise since 23rd January 2024 where prices were a at a low of US$38,678.18. Prices have been skyrocketing since 7th February 2024, and have crossed the US$46,000 on 9th February 2024! This was already predicted by some analysts on Weibo, saying that prices will not dip, and to welcome the bull market during Chinese New Year.
Crypto analysts have found that Bitcoin prices would almost always drop in the weeks leading up to the Chinese New Year. Hence in the weeks before and during the “Chinese New Year Dump”, traders expect huge volatility in crypto prices.
Why is there a Chinese New Year Bitcoin dump?
Chinese New Year marks the longest extended holiday in China. This period marks the world’s largest short-term migration as people return to their hometowns to visit family. People also cash out to send money back to their families and gift children “red packets”. Therefore, crypto prices dump during Chinese New Year as there is lower trading volume when everyone has “cashed out” their crypto or is busy celebrating.
When is Chinese New Year in 2024?
This year, Chinese New Year will begin on 10 February and end on 13 February.
Alchemy Pay ($ACH) is leading the Chinese coin rally. And data suggests Alchemy Pay prices can go much higher throughout 2023. They are collaborating with the likes of Binance, Visa, MasterCard, and PayPal to provide crypto and fiat payment services. In this article, we will explain what Alchemy Pay is, and why $ACH should be on your 2023 watch list.
What is Alchemy Pay?
Alchemy Pay provides real-world crypto payment solutions and fiat on/off ramps for global businesses, developers, and consumers. One key problem in the current blockchain payment landscape is the lack of integration between traditional financial systems and cryptocurrencies. The project aims to address this by incorporating a hybrid solution. The solution is to (1) simplify the use of crypto to access traditional financial services; and (2) have fiat currency access blockchain services and value.
This will be huge for driving crypto adoption, as it is essentially a network system that allows cross-platform payments. For example, users can use their credit cards to make payments in fiat currencies. Their payment gateway converts this into crypto. This allows users to make credit card purchases while benefiting from the advantages of cryptocurrency. Such as faster and more secure transactions.
Payment Channels and Strategic Partners
Alchemy Pay already has a global reach of 173 countries and over 300 fiat payment channels. These include Visa, Mastercard, Apple Pay, Google Pay, regional mobile wallets, and domestic bank transfers. They also have a massive network of strategic partnerships with many major blockchain networks and services. For example Polygon, Chainlink, Arbitrum, Coinbase, and Bybit.
Who is the Team behind Alchemy Pay?
In 2018, Molly Zheng and Shawn Shi established Alchemy Pay in Singapore. Both founders have extensive backgrounds in the financial sector. Zheng previously held the position of senior consultant at PayPal China, and also worked for HSBC China and Mastercard China. In 2021, Zheng was appointed Chairwoman of Alchemy Pay’s Board and was succeeded as CEO by John Tan, the then-COO. Tan was responsible for driving the growth of the project’s payment business. He did this by securing the company’s initial base of merchant networks across Asia. Their team now boasts over 80 members who have deep experience across the blockchain and payments industries.
Furthermore, the announcement of a new licensing regime for Virtual Asset Service Providers (VASP) in Hong Kong has generated public interest in Chinese cryptocurrencies. Even though this licensing regime will not have a direct impact on retail buyers. However, both these catalysts may not have as significant of an impact as anticipated. The uncertainty of the actual size of the monetary easing and the lack of a well-defined concept of a “Chinese coin” remain.
People are still interested in taking advantage of any potential mini-rally despite these uncertainties. And are actively searching for investment opportunities. Whilst $ACH still has a small market cap, but with strong connections and established infrastructure, it could become a leading contender in China this year.
Alchemy Pay news
On 23rd February 2023, Alchemy Pay announced its partnership with Conflux Network. Conflux Network is a permissionless Layer 1 blockchain which connects decentralized economies across borders and protocols. Through this partnership, Alchemy Pay would be able to have an easy fiat on-ramp onto its ecosystem. This on-ramp payment solution will allow people to buy crypto using their local currency, which will give Conflux’s system a higher level of convenience for both beginners and experienced users. By working together, Alchemy Pay will help Conflux expand its reach around the world. Now with 2 of China’s hottest projects joining forces, we will hopefully see a massive boost for both Alchemy Pay and Conflux’s tokens.
Alchemy Pay $ACH Token and Price Prediction for 2023
$ACH is the utility token of Alchemy Pay, issued on the Ethereum blockchain as an ERC-20 token. There is a total circulating supply of 4 billion $ACH. Its primary use is for its partners to pledge their $ACH as an intermediate settlement currency between token payment networks. Also, as a medium for transaction fees. Alchemy Pay coin is required for every transaction. But, businesses and merchants within the network receive $ACH incentives for accepting crypto as payment at their point of sale.
As of 20th February 2023, we can see from the price chart that $ACH price is gaining a momentum. There has been a 142.1% increase over the past seven days. Technical indicators do show that $ACH is overbought. But its long-term 50 & 200 daily moving average crossover indicates a bullish trend. This suggests that $ACH is likely to continue its uptrend. The pump to $0.041 at the time of writing is partly attributed to news of them partnering with Google Pay. Provided they expand their infrastructure and build more connections, $ACH could deliver strong returns in 2023.
Frequently Asked Questions (FAQs)
What is Alchemy Pay?
Alchemy Pay is a blockchain and cryptocurrency project which aims to provide real-world crypto payment solutions and a fiat on/off ramp for global businesses, developers, and consumers.
Is Alchemy Pay a good coin?
Alchemy Pay is a good coin with potential. $ACH is currently at US$0.050599 and its all-time high price was $0.198666. It is currently ranked number 177 amongst all cryptocurrencies in terms of market capitalization.
Is Alchemy Pay a good investment?
Alchemy Pay’s $ACH token is also very popular among Chinese cryptocurrency investors. As with any investment, it is important to do your own research and consider the potential risks before investing in Alchemy.
Does Alchemy Pay have potential?
Alchemy Pay does have potential since the Chinese cryptocurrency community views the project so favourably. Also, the Chinese crypto narrative is seen as a huge trend this year, which will certainly give Alchemy Pay a boost.
Who invested in Alchemy Pay?
Alchemy Pay completed its Series A funding round in 2022. They raised US$15 million from several investors including Charles Schwab and Jay Z.
In what might be considered a contrast to mainland China’s strict anti-crypto stance, Hong Kong’s goal of becoming a cryptocurrency hub is reportedly seeing subtle support from the Chinese government. This could be the beginning of a massive crypto expansion in the Asian market, as the “Chinese coin” narrative is increasingly gaining much traction.
Hong Kong SFC Proposes Crypto Regulations that Benefits Retail Investors
According to Bloomberg, Hong Kong is gearing up for a consultation process that could potentially legalize retail cryptocurrency trading in the region. The Securities and Futures Commission of Hong Kong (SFC) proposed new regulations on 20th February that require all centralized crypto exchanges operating in the region to obtain licenses from the regulator.
The proposal also suggested allowing retail traders to use licensed cryptocurrency trading platforms, citing public input that restricting access to crypto markets could drive Hong Kong residents to trade on unregulated foreign platforms.
Major Crypto Businesses Looking to Expand into Hong Kong
The recent regulatory changes have encouraged crypto businesses to look for opportunities to expand into Hong Kong. Huobi Global has declared its intention to acquire a local license and open a new exchange that caters to institutional and high-net-worth investors.
Justin Sun, the founder of Tron and adviser to Huobi, mentioned to Bloomberg that the company is planning to apply for a crypto trading license from the SFC. He stated that the new license would allow Huobi to offer a wider range of crypto trading and investment options to customers in Hong Kong. (Tramadol) The new exchange, Huobi Hong Kong, will be specifically tailored to institutional investors and high-net-worth individuals.
China Gives Green Light to Hong Kong’s Crypto Expansion?
Representatives from China’s Liaison Office have been attending Hong Kong’s crypto events, and their encounters with the local crypto businesses were reportedly positive. This is perceived by some as support for Hong Kong’s ambition to become a crypto hub, using its separate legal system and markets as a testbed.
Nick Chan, a National People’s Congress member and crypto lawyer, was quoted by Bloomberg as saying that Hong Kong is free to pursue its own interests as long as it does not cross the line and endanger financial stability in China under the “One Country, Two Systems” framework.
News of potential quantitative easing in China has led crypto experts to believe that there will be a surge in the value of Chinese blockchain projects. As such, Conflux Network ($CFX), one of China’s public blockchain, has seen a whopping 1600% price increase in 2023. In this article, we will explain what Conflux is, and why $CFX should be on your watch list this year.
If you are interested in another Chinese crypto project, Alchemy Pay ($ACH) is also a top Chinese project this year.
What is Conflux?
Conflux Network is a public blockchain platform designed to support high-performance decentralized applications (dApps). It aims to address some of the limitations of existing blockchain networks such as slow transaction processing times, limited scalability, and high fees. It uses a novel consensus algorithm called Shanghai Tree-Graph that enables high throughput while maintaining decentralization and security. The algorithm allows multiple blocks to be generated in parallel and then merged into a single chain.
Conflux Network also supports a range of smart contract languages, including Solidity, the most widely used language for Ethereum smart contracts. This means that developers can easily port their existing dApps from Ethereum to Conflux Network and take advantage of its faster transaction processing times and lower fees.
Who is the Team behind Conflux?
Conflux Network was founded by a team of researchers and developers from Tsinghua University in China and the University of Toronto in Canada. The co-founders of Conflux Network are Fan Long (CEO) and Xiaolong Wang (Chief Scientist). The team also includes a number of other experienced researchers, developers, and advisors from various fields, such as computer science, blockchain, and finance.
Why is $CFX Pumping?
The current price surge of $CFX seems to have strong support from retail investors, as indicated by social media metrics and fundamentals. This came as a result of two significant developments made by Conflux:
On 15th February 2023, Conflux announced that they are developing blockchain-based SIM cards in partnership with China Telecom, one of the largest wireless carrier in China (390+ million movile subscribers). The trial program will first launch in Hong Kong later this year, followed by key mainland China locations such as Shanghai.
China Telecom, 2nd largest wireless carrier in China 🇨🇳 (390+ million mobile subscribers), has partnered with Conflux to develop Blockchain-enabled SIM cards – BSIM! pic.twitter.com/LQxz34L432
Earlier in late January, Conflux partnered with Little Red Book, the Chinese equivalent of Instagram, to provide NFT services for the social media platform’s 200 million users. The news prompted a 90% increase in CFX’s price.
$CFX Price Prediction 2023
Looking at the technical aspects, CFX has experienced a significant increase in price which has caused it to become very overbought. This can be seen in both the daily and weekly charts where CFX’s relative strength index has risen above 70, indicating that the uptrend is close to its limit.
Additionally, the Conflux Network token is currently testing the $0.28-$0.41 range as a resistance level, which was previously a support level between May and November 2021. If CFX falls back from this resistance area, its price could drop to the range of $0.097-$0.141, which is its main downside target.
This range also coincides with the token’s 50-week exponential moving average (50-week EMA) at around $0.108, which is approximately 65% lower than the current price levels. On the other hand, if CFX manages to break above the $0.28-$0.41 range decisively, its price could rise to $0.84, which was the resistance level during the May-September 2021 period.
Will $CFX Continue Its Momentum Throughout 2023?
From a fundamental standpoint, $CFX is part of the “Chinese coins” narrative that is trending in 2023. With the potential of quantitative easing in China and crypto expansion in Hong Kong, people on the Crypto Twitter space are actively searching for investment opportunities in the Chinese market, taking advantage of any potential rally. $CFX still has a relatively small market cap, but has the potential to deliver strong returns for its investors if its momentum continues. And its momentum will likely continue if continuous development is seen in the Asian market.
China’s national digital currency DCEP (Digital Currency Electronic Payment, DC/EP) will be built with Blockchain and Cryptographic technology. This revolutionary cryptocurrency could become the world’s first Central Bank Digital Currency (CBDC) as it is issued by the state bank People’s Bank of China (PBoC). The goal and objectives of the currency are to increase the circulation of the RMB and its international reach – with eventual hopes that the RMB will a global currency like the US Dollar. China has recently established an initiative to push forward Blockchain adoption, with the goal of beating competitors like Facebook Libra – a currency that Facebook CEO Mark Zuckerberg claims will become the next big FinTech innovation. China has made explicit that Facebook Libra poses a threat to the sovereignty of China, insisting that digital currencies should only be issued by governments and central banks. DCEP is not listed on cryptocurrency exchanges and will not be for speculation of value.
The significance of DCEP is that it’s designed as a replacement for the Reserve Money (M0) system, cutting back the cost and friction of bank transfers. It is suggested that DCEP will alleviate the risks of offline paper money transactions such as anonymous counterfeiting, money laundering and illegal financing. This is because regulators can better monitor digital currency transactions, which some consider will greatly improve financial and monetary supervision. DCEP can also reduce the costs involved in maintaining and recycling banknotes and coins.
Basically, DCEP is poised to become a digital version of the RMB.
Furthermore, the issuance of DCEP is conducive to promoting the internationalization of the RMB and reshaping the current cross-border payment system. This is because prior to the RMB Cross-Border Inter-Bank Payments System (CIPS) going live in early October 2015, RMB cross-border clearing and settlement was mainly done through CHIPS (Clearing House Interbank Payments System) or SWIFT (Society for Worldwide Interbank Financial Telecommunication). However, some consider that both the CHIPS and SWIFT systems have fatal flaws. Firstly, CHIPS is a US company. Whilst SWIFT, in particular, is seen as a cause for concern to the Chinese because due to its foothold in the international banking system, it is almost essential to use SWIFT for inter-bank transfers across countries. Thus whoever controls SWIFT’s data center will have access to information on almost every cross-border remittance, which some in China posit is the US. This is because whilst SWIFT claims to be a neutral international organization, 12 of the 25 directors are either from the US and her allies. Also, its transactional data were found to have been supplied to the US. Hence it is thought that China is being held back by the US via the SWIFT system, and so, in internationalizing the RMB- China requires its own worldwide banking system- i.e. DCEP.
Hence the Chinese consider that it is a requirement to form a new currency clearing network.
According to Chinese media, DCEP is seen as the “3rd Wave” aimed at the US.
A mandate to adopt Blockchain
China has established a countrywide initiative to push forward Blockchain Adoption. President Xi Jinping has mandated that the ‘country’s development of blockchain technology should be sped up ‘ on Oct 24th in front of the Political Bureau. This speech has also been echoed by Li Wei, head of the People’s Bank of China. In April of 2020, China launched the Blockchain Service Network to unify all the Blockchain related projects in the Nation.
China has adopted the “Blockchain, not Cryptocurrency”, whereby the benefits of Blockchain is highlighted. On the other hand, cryptocurrencies that are native to Blockchain are suppressed as Cryptocurrency Exchanges and ICOs are banned in the country.
History and development of DCEP
Development of DCEP started in 2014 with the establishment of a research institute dedicated to digital currencies and looking at how to improve the Chinese Yuan system with blockchain technology. However during 2014 to 2018, the development process slowed down, probably because the decentralised nature of Bitcoin or blockchain is incompatible with the nature of the Renminbi as a legal national currency. Things rapidly picked up towards the end of 2019 however and this was directly attributable to Facebook preparing to launch Libra, particularly as partner members of the Libra Association and the currencies which Libra was to be backed by had consciously rejected China. Hence, feeling the heat of the competition, China’s central bank felt immense pressure to urgently speed up in the global competition towards a digital currency.
Former Vice-chair of the PBoC’s National Council for Social Security Fund announced on 22nd June 2020 that China had already completed the backend infrastructure of DCEP.
Uses for DCEP
DCEP will be the only legal digital currency in China
DCEP is a currency created and sanctioned by the Chinese Government. It is not a 3rd party stable coin such as Tether’s cryptocurrency token “CNHT” which is also pegged to the RMB in a 1:1 ratio. DCEP is the only legal digital currency in China (cryptocurrencies such as Bitcoin are not legal tender in China).
Huang Qifan (Chairman of the China International Economic Exchange Center) said they have been working on DCEP for five to six years now and is fully confident it can be introduced as the country’s financial system. It’s currently being rolled out, with the People’s Bank of China issuing the currency. According to a speech by Huang at the China Finance 40 Forum, “DCEP can achieve real-time collection of data related to money creation, bookkeeping, etc, providing useful reference for the provision of money and the implementation of monetary policies.”
DCEP is not for speculation
China has made it explicitly clear that its National Digital Currency is not for speculation. Mu Changchun, Head of the People’s Bank of China digital currency institute made it as “a digital form of the yuan” and that “The currency is not for speculation. It is different to Bitcoin or stable tokens”. This is to the disappointment of the online community in China, where some netizens commented “So there will be no fun in it” on Sina.com.
It is also not possible to mine DCEP or stake on the DCEP network.
Cross-border payments with m-CBDC Bridge
China has joined forces to explore cross-border payments for digital currencies alongside Hong Kong, Thailand, the United Arab Emirates (UAE), and the Bank of International Settlements (BIS).
According to a joint statement in February 2021, the People’s Bank of China and the UAE’s central bank are taking part in the Multiple Central Bank Digital Currency (m-CBDC) Bridge project initiated by the Hong Kong Monetary Authority and Bank of Thailand in 2019.
The m-CBDC Bridge project will explore the capabilities of distributed ledger technology, through the development of a proof-of-concept prototype. The project ultimately aims to facilitate cross-border, multi-currency, real-time transactions around the clock.
This move aligns with China’s long-term ambition to use DCEP to boost the use of RMB in international payments. While the project is currently an alliance between just Beijing, Hong Kong, Bangkok, and Abu Dhabi, it is strongly supported by the BIS, an organisation owned by 63 central banks.
The announcement also comes mere weeks after China’s joint venture with SWIFT, the dominant network facilitating international payments between banks. The new entity, Finance Gateway Information Service, was registered in Beijing on January 16 with €10 million (US$12 million) as incorporation capital, according to the National Enterprise Credit Information Publicity System, the Chinese government’s enterprise credit information agency.
Special features of DCEP
DCEP is a Centralized Currency
DCEP is a digital currency that is run on a centralized private network – the Central Bank of China has complete access and control of the currency. This is a huge contrast to Bitcoin, which has an open decentralized network where there is no centralized leader. In the case with DCEP, the Central bank of China has the ability to create or destroy DCEP.
NFC Contact based payment
According to Official Sina Blockchain, DCEP will have NFC based payment options that don’t require devices to be online during the transfer. This will be poised as a direct replacement of paper money, as DCEP will be usable in areas without internet coverage. In addition, DCEP doesn’t require the mobile device to be bound to a bank account – meaning the unbanked population will also have access to the digital currency.
With DCEP’s tap payment feature people can transfer money simply by tapping two phones together, without the use of the Internet. So DCEP is not exactly like blockchain either, rather it is their own variant.
China Construction Bank launches DCEP wallet
On 29th August 2020, China Construction Bank (CCB) had a soft launch of the DCEP wallet. Users of one of China’s big four state-owned commercial banks found a DCEP wallet feature was available inside their mobile app. Users were even able to navigate to the digital yuan wallet and activate it through registering their mobile phone numbers.
Finally, users can send/receive digital currency to others by inputting their unique wallet ID or the phone number associated with the bank account.
CCB DCEP wallet
However, CCB has disabled the DCEP wallet feature from public access, but not before it gained huge attention. Users searching for this wallet now will only get an error message saying that the function is not yet officially available to the public.
Tencent to be a major partner of DCEP
Tencent’s Meituan Dianping has been in talks with the research wing of the PBoC on real-world uses for DCEP. Meituan Dianping boasts billions of dollars in daily transactions on their mobile app platform offering services such as food delivery (similar to UberEats), B&B bookings (similar to AirBnb), ride hailing services, bike sharing, grocery shopping and more. Basically for those in China, all your daily necessities can be met on the Meituan ecosystem.
The PBoC’s research wing is also in talks with another Tencent-backed company, Bilibili Inc. which provides video streaming services. So whilst the specifics of the partnership are yet to be finalised, it is likely that such cooperation is going to be huge for the mass use of DCEP in China.
According to Caijing magazine, the pilot institutions for DCEP will be the 4 major state-owned banks i.e. China Construction Bank, the Agricultural Bank of China, Bank of China and the Industrial and Commercial Bank of China. This initial deployment will serve as an official production test for the currency system, where the network and security will be validated. In the second phase, DCEP will be distributed to large fintech companies such as Tencent and Alibaba to be used in WeChat Pay and AliPay respectively.
DCEP will operate on a two-tiered system
The issuance and distribution of DCEP will be based on a two-tiered system.
The first tier would be transactions between the PBoC and intermediaries. These intermediaries would be financial institutions (e.g. the 4 major state-owned banks i.e. China Construction Bank, the Agricultural Bank of China, Bank of China and the Industrial and Commercial Bank of China) and non-financial institutions such as Alibaba, Tencent and UnionPay. Here, the PBoC would issue DCEP to the intermediaries.
The second tier would be between the above-mentioned intermediaries and participants in the retail market such as companies (e.g. retail stores) and individuals. In this tier, the intermediaries that have received DCEP will distribute it to retail participants so that it would circulate through the market e.g. through people purchasing items at stores etc.
The main difference in the issuance and distribution of DCEP compared to traditional cash however is the fact that DCEP would be transferred through electronic wallets, rather than bank accounts.
The central government has mandated that all merchants who accepted digital payments (such as Apple Pay, AliPay and WeChat) pay must accept DCEP. This will give DCEP a large nationwide acceptance in China, with every merchant obligated to participate or face a potential loss of their business license. This will make DCEP the most accepted digital currency in the world.
DCEP red packets to be launched for Chinese New Year
China’s DCEP app has launched a red packet gifting feature in time for the Chinese New Year on 22nd January 2023. The app will allow users to send the red packets i.e. “hongbao” containing DCEP to others. This is based on the Chinese New Year tradition of gifting lucky money during the annual festival. In fact, WeChat Pay and Alipay already have this feature for gifting CNY. However, it is the first time that e-CNY will be gifted in such a way, with hopes that this will further pave the way for the mass adoption of DCEP.
DCEP can be used to pay expressway tolls
On 28th December 2022, Chongqing Expressway Group announced it has completed the installation of equipment to accept DCEP for expressway tolls. From 30th December 2022, DCEP can be accepted as payment for tolls on the Chongqing Expressway. Users will need to download the e-CNY app and then simply present the payment QR code at the toll booth.
PBoC’s financial statistics reports now include DCEP/e-CNY
On 10th January 2023, the PBoC released its annual Financial Statistics Report for 2022. What is worth noting is that for the first time, the PBoC included statistics on DCEP/e-CNY. The Report states that as of the end of December 2022, the amount of digital currency in circulation was 13.61 billion yuan. This equates to around 0.13% of the total balance of yuan (13.61 trillion yuan) in circulation at the end of 2022.
Are people in China using DCEP?
According to a report on 28th December 2022, there has been over US$14 billion worth of DCEP transactions since its launch in 2020. Meanwhile, 261 million users have already set up an e-CNY wallet. However, this is considered low adoption since around 903.6 million people use mobile payments in China, according to a 2021 UnionPay report.
DCEP scams
Mere hours after DCEP has been announced, various (potentially scam) Chinese exchanges have listed IOUs or knock-offs clones of DCEP. It’s important to know that DCEP is currently only distributed to banks working with the PBoC and will not be available for the public. If you want to find out what are reputable exchanges, check out our top cryptocurrency exchanges guide. It is strongly recommended NOT to trade DCEP until it is officially released as there is no guarantee exchanges have access to the digital currency.
Knock-off clones of DCEP are already trading in (potentially) scam exchanges.
How to buy DCEP?
Currently, DCEP is only available to other banks working with the People’s Bank of China. This will eventually open up to the general public in 2020. There are currently no cryptocurrency exchanges that trade DCEP.
Implications of DCEP?
Is DCEP a challenge to the US monetary system?
The overwhelming view appears to be yes, both from the Chinese and the US perspective. According to statistics from the World Bank, 1.7 billion adults around the world use cash because they don’t have bank accounts. However, two-thirds of this population own a mobile phone, which can be used to make monetary transactions. This is what’s been happening in China, where mobile payments such as Alipay or WeChat Pay have more than 1.7 billion customers across China. Currently, the two online payment companies handle more payments monthly than Paypal did in the whole of 2017 (i.e. USD $451 billion). It’s very common in China to see street vendors accepting Alipay or WeChat pay.
Alipay and WeChat being accepted at an ATV rental shop
With the mobile wallet payment infrastructure in place, their cooperation with the PBoC could be the answer to distributing DCEP overseas. This would fit China’s “Belt and Road Initiative”, the aim of which is to build a new trade route connecting Asia with Europe and Africa. The idea is that with DCEP being used by mobile wallets, populations along the Belt and Road can be connected, bypassing existing financial infrastructures completely and giving an opportunity for the unbanked to pay for online purchases and build their savings.
In the US, the government does not see a demand for digital currencies. In a letter from the Chairman of the Federal Reserve, Jerome Powell, he took the view that many of the challenges a digital currency intends to solve do not apply to the US. In his view, the US payments landscape is already highly competitive and innovative, with plenty of digital payments options for consumers. Powell also commented, echoing the sentiments of those US lawmakers opposing Libra, that a digital payment where you would know and be able to track each and every payment would be unattractive for the US.
Whilst the House Committee on Financial Services also sees Libra as potentially raising national security concerns, observers consider the challenge from China is not being taken seriously. Because on the other hand, China is worried that Libra will reinforce the dominance of the US Dollar and is therefore working on fast-tracking the launch of DCEP. And it is likely that China will outrun the threat from Libra.
From a wider perspective, some take the view that DCEP can be used as a weapon against the US in an economic war. This is because as DCEP becomes accepted across the Belt and Road, China will have the power of total surveillance and control over the economic activity of potentially half the world’s population. DCEP will allow China to track everyone’s spending and transactions, and can seize or lock customers’ digital assets in their mobile wallets. We’ve already seen this in China, where together with its “social credit system”, millions of individuals have already been barred from purchasing airline tickets using their mobile wallets.
Appearance on Chinese television debate show “Tiger Talk”
On 29th August 2020, I appeared on China’s Phoenix Television show “Tiger Talk” (一虎一席談). Tiger Talk is one of Phoenix TV’s longest-running shows, each week they feature a debate on a major societal issue or event, and would invite experts, academics and guests to participate in the discussion. I was invited by Phoenix Television as an overseas analyst to discuss the topic of the week, namely, “DC/EP: China’s release of digital currency, will it shake the US Dollar’s hegemony?”. You can watch the episode here.
Guest appearance on Tiger Talk
Implications of DCEP on Bitcoin and cryptocurrencies
In the first instance, it should always be borne in mind that DCEP and Bitcoin/cryptocurrencies are vastly different. Key differences are that DCEP does not necessarily use blockchain technology and that it is a centralised currency under the control of a centralised authority. Learn more about the differences between DCEP, Libra, Bitcoin and Cash.
However, the large scale promotion of DCEP on national television in August 2020 is certainly bracing and preparing Chinese citizens for a digital version of the RMB. The gradual rollout of DCEP will also get the average citizen accustomed to the actual usage of digital currencies.
As a result, many people are excitedly speculating on the possibility of a bridge between DCEP and various existing blockchain projects- with some projects proclaiming they will be the first project to launch on DCEP. However it must be borne in mind that we do not know the full technical details of DCEP, so we do not know how this bridge between blockchain and DCEP will work, if at all. Also, the fact is that China is currently very hostile towards cryptocurrencies, this is mostly due to a number of cryptocurrency scams- such as Plus Token. As a result, the Chinese government have closed several bank accounts found to be involved in cryptocurrency transfers and banned all ICOs, several major cryptocurrency exchanges such as Binance and OKEx and some Over the Counter desks. Hence a lot of cryptocurrency circles and discussions occur underground, such as in private WeChat groups.
In a confusing twist, however, the CCP’s official media outlets 参考消息, Xinhua and CCTV have been pushing out headlines that crypto assets are the best-performing asset year to date. Dovey Wan, Founding Partner of Primitive Ventures has observed that the real intent behind this media push is difficult to interpret, but so far the Chinese cryptocurrency community see this as a signal that crypto has reached its top. Meanwhile, on the Western front on Twitter, people have been seeing this as a bull signal. Currently, without any further moves or news in China about DCEP or on the cryptocurrency front, we can only wait and see what China’s next move will be.
Hmm this is an interesting propaganda vibe from CCP’s official media outlets as “参考消息”, Xinhua and CCTV2
the headline “cryptoasset is the best performing asset YTD” was featured on all avenues, news paper, online media and TV
Will DeFi push governments to finally adopt CBDCs?
Decentralised Finance (DeFi) can be considered the cryptocurrency and blockchain star of 2020, having revived the cryptocurrency market and bringing some much-needed revival and positivity. But what is DeFi? In short, DeFi attempts to bring traditional banking to developing industries, but with a twist: it would be open-source, decentralised, cheap and will cut out the middlemen. (Xanax)
So what can central banks and government do to maintain their dominant status quo whilst benefitting from the technology that DeFi can bring? An answer could be to create a CBDC. In a Forbes article, the author suggests that CBDC would be a positive move for governments since it tokenises money whilst allowing users to enjoy the advantages of cheaper, faster transactions.
The article also touches upon our coverage of DCEP and discusses China’s progress in testing DCEP contrasted with the progress of introducing a CBDC in the US. It suggests that governments and institutions, however, will need to be quick to catch up as new DeFi solutions in payments, mortgage, insurance etc. are being created weekly, and this legion of fintech innovators are growing. These innovators challenge the status quo, and with the mounting advantages of DeFi, there may soon be a real contender vying for the attention of citizen-consumers.
FAQs
Is DCEP backed by Gold?
The simple answer is u0022Nou0022. On a recent episode of Kitco News, journalist Max Kaiser claimed that China will launch a gold-backed cryptocurrency, with the intention of destroying the USD as a reserve currency. He added that China has already amassed as much as 20,000 tons of gold. However this is mere speculation – China has no plans to return to the Gold Standard nor issue gold-backed cryptocurrencies.
Will DCEP be interoperable with other Cryptocurrencies
There are many plans to build gateways that allow the swapping of DCEP to other cryptocurrencies. Projects such as Algorand have stated they want to support DCEP and build possible bridges to swap these currencies. However, as the technical details of DCEP have not been fully revealed, such bridges have not been built yet.
Who can issue e-CNY?
There are 7 Chinese commercial banks that can provide e-CNY. They are: ICBC, Agricultural Bank of China, Postal Savings Bank of China China Construction Bank, Bank of China, Bank of Communications, and China Merchant’s Bank. There are also 2 online banks that can provide e-CNY i.e. WeBank (WeChat Pay) and MyBank (Alipay).
Which Chinese Cities can sign up and use the e-CNY app?
Currently, there are 12 cities and areas in China which can sign up and use the e-CNY app. They are Shenzhen, Suzhou, Beijing Xiong’an, Chengdu, Shanghai, Hainan, Xi’an, Changsha, Dalian, Qingdao, and Zhangjiakou.
Can tourists or non- Chinese locals use DCEP?
No, DCEP is not fully rolled out yet and is only available in select cities in China.
Is China using DCEP?
According to a report on 28th December 2022, there have been over US$14 billion in transactions since the launch of DCEP in 2020 and October 2022. Meanwhile, 261 million users have already set up an e-CNY wallet. However, this is considered low adoption since, according to a 2021 UnionPay report, around 903.6 million people use mobile payments in China.
When will China officially launch DCEP e-CNY?
Whilst there is ongoing DCEP/e-CNY testing on in increasing scale, there is no official announcement as to when and how China will fully roll out DCEP/e-CNY.
Disclaimer: Cryptocurrency trading involves significant risks and may result in the loss of your capital. You should carefully consider whether trading cryptocurrencies is right for you in light of your financial condition and ability to bear financial risks. Cryptocurrency prices are highly volatile and can fluctuate widely in a short period of time. As such, trading cryptocurrencies may not be suitable for everyone. Additionally, storing cryptocurrencies on a centralized exchange carries inherent risks, including the potential for loss due to hacking, exchange collapse, or other security breaches. We strongly advise that you seek independent professional advice before engaging in any cryptocurrency trading activities and carefully consider the security measures in place when choosing or storing your cryptocurrencies on a cryptocurrency exchange.
Rumors have surfaced in China that a Huobi Executive has been held under custody by Chinese Authorities.
Huge deposits into Huobi
There has been a deposit of over $400 Million worth of Tether and other cryptocurrencies to the exchange. Two of the transactions are extremely large, accounting for $304 million USD (as spotted by Whale alerts).
China is tightening control over cryptocurrencies trades
On an official level, cryptocurrency exchanges are not permitted in china after the 2017 ban. However, enforcement of this policy has been relatively weak in 2018 and 2019. Cryptocurrencies were traded largely via OTC – over the counter desks that exchanged fiat deposits to crypto. Interestingly enough, key Chinese exchanges such as Huobi, Okex, and Binance all offered OTC matching services. It is important to make the distinction that exchanges didn’t facilitate the actual exchange – instead, they matched exchange users and independently operated OTC services.
In 2020, OTCs bank accounts were targeted and bank accounts of involved parties were suspended.
Huobi Token drops in value
The value of the Huobi token declined by over 20% in a flash crash following the rumor. This was also correlated to the large movement of USDT out of the exchange.
HT suddenly fell sharply, 100 million USDT was transferred, COO was reported to be investigated but there was no response temporarily, triggering panic in the Chinese market. Huobi is the largest exchange in China. (https://kidsrkids.com) After the OK, Huobi was also panicked. pic.twitter.com/oQtQBQhh1N
Initially it was suggested that Chairman, Founder and CEO Leon Li was arrested. As with the OKEx detention incident, people on Chinese social media tried to find ways to see if this was true. Among those were people who again tried to check his pedometer and breathed a sign of relief when they found he had been walking more than 5,000 steps today.
Li Lin pedometer
Huobi Denies all rumors, stating they are false
Huobi has come out to deny all the rumors, stating that there are no members of the Huobi team that are taken under custody.
Nevertheless, users are not taking their chances and rushing to withdraw their deposits from Huobi. According to Whale Alert, nearly USD$240 million worth of Bitcoin has been transferred out of Huobi in the space of 2 hours on 3rd November 2020.
Filecoin ($FIL) is created by Protocol Labs and aims to provide a real use case for blockchain technology outside of finance. As the name suggests, it’s all about files. But, since the system is decentralized, how does it guarantee security and availability? Also, are those storing files paid? Here, we look at what Filecoin is, plus the reasons why it has become quite a sensation in China.
Summary
Filecoin is a decentralised file storage network. Users pay for their files to be stored whilst those that help with storage are rewarded with $FIL tokens.
The project raised USD$200 million in its Initial Coin Offering (ICO) in 2017. Mainnet launch will be around 3:00pm (UTC) on 15th October 2020.
Filecoin has already been on the Chinese radar since 2018 where Chinese firms have started marketing Filecoin cloud mining services. It is considered easier to mine because specialised mining devices are not required.
Filecoin is also popular in China because of speculation on the price of $FIL tokens. Some exchanges already offer $FIL trading on an IOU basis.
What is Filecoin ($FIL)?
Filecoin is a decentralised file storing network that rewards users who store files. Those who keep files are referred to as storage miners. Users pay for their files to be stored while storage miners are rewarded for their work.
Its distributed nature allows for peer-to-peer file storage and retrieval design. The platform has a native virtual currency called FIL, which is used to reward miners.
The network is inspired by Web3, an advanced software development architecture that eliminates centralization. Filecoin can provide file storage services to other decentralized platforms as well. Furthermore, the network projects a way to enable transaction interaction with other blockchain platforms promoting interoperability.
What is Filecoin Token $FIL?
Filecoin token $FIL is the platform’s native virtual currency which is used to reward miners. Note that Filecoin mainnet has not launched yet and FIL tokens are not in circulation. However, as will be seen below a few exchanges are already trading FIL on an IOU basis. This means that users will only receive FIL tokens in the future. However, this has not deterred enthusiasts, with FIL having more than USD$100 million in trading volume every 24 hours and prices seemingly on an upward trajectory.
Upon the Filecoin mainnet launch (see below), Huobi Global will launch $FIL and open trading, deposits and withdrawals. Other exchanges have also rushed to list one of the most talked-about Chinese projects since 2017 such as Binance and FTX exchanges.
Filecoin Mainnet Launch
Protocol Labs spearheaded the project’s ICO in 2017. Backed by top names in venture capital like Sequoia and Andreessen Horowitz, $200 million was raised.
The ICO was followed by testnet postponement until 2019. Protocol Labs initially promised the mainnet launch in the first quarter of 2020.
Filecoin mainnet has now launched at epoch 148,888- at around 3:00pm (UTC) on 15th October 2020. You can check the status of the chain here.
How Filecoin works
For users
Users on the platform are charged for file storage. However, storage charges vary depending on whether a user chooses speed over redundancy and vice versa. Also, storage prices are affected by availability and demand.
For storage miners/providers
On the Filecoin protocol, a storage provider can either be an individual or an organization. And the only criteria for becoming a miner is having a free hard disk space and an internet connection. Miners will also have access to the entire pool of Filecoin users.
For smooth usage, the network provides a standard application programming interface for miners and advertises their availability. Without individual marketing, storage providers rely on speed, storage space, and reliability to woe users and attract rewards.
Filecoin has a self-healing feature that automatically checks if files on the blockchain are stored correctly. Additionally, the feature enables the network to detect faulty miners and their loads to be distributed to other miners.
The process of self-healing generates tracks showing a miner’s history on the network. A good reputation earns them more storage opportunities hence more rewards. The system uses proof-of-file and proof-of-storage mechanisms that are not energy-intensive, like the proof-of-work mechanism employed by Bitcoin (BTC).
Apart from general storage miners, there are also retrieval miners. These type of miners need to have a strong internet connection as they pre-fetch the most downloaded files and deliver them to users who are in close proximity. Afterward, they are rewarded for facilitating a smooth traffic flow on the network.
China is all-in on Filecoin
Miners are seriously considering Filecoin
Although the protocol does not require specialized mining devices for access, China is eyeing developing Filecoin mining hardware. Furthermore, Chinese investors are already speculating on FIL’s price. In fact, the Chinese have already been into Filecoin since as early as 2018, and with the mainnet launch being potentially weeks away, the hype is only getting stronger.
For example, when Protocol Labs announced an incentive program in early June 2020, Chinese firms started marketing cloud mining services that users can contract and use to provide storage to Filecoin users.
With the popularity of cryptocurrency mining in China, it is not surprising that these firms attracted a minimum of $500,000 in sales in the first few days. In addition, data from blockchain explorers revealed that the leading storage miners on Filecoin are located in China. Cumulatively, these miners account for over 80 percent of the network’s testnet storage mining power at roughly 15 petabytes (15,000 terabytes).
However, the tremendous uptake of storage mining in the Asian country can be attributed to the country’s love for Bitcoin and other cryptocurrency mining activities. Although Bitcoin trading is banned in China, most of Bitcoin’s mining power is still concentrated in the country at approximately 65 percent.
Also, even before Filecoin went live, mining hardware companies were already hyping their products in anticipation. Andy Tian, the co-founder of 1475, a hardware manufacturing company, thinks that China’s Filecoin mining hype is partly driven by the fact that the idea behind the mining is simpler to retail miners compared to mining BTC where ASICs are used.
The anticipation in China is so high that more than $15 million worth of Filecoin mining software and hardware has been stashed by mining pools waiting for investors and self-mining. Other large BTC mining companies like RRMine reportedly sold $15 million in cloud computing contracts “within minutes.” RRMine is also accumulating FIL mining hardware.
Unfortunately, it’s not the amount of free space you provide to the network that matters more, but the amount of sealed data. While accessing the FIL protocol does not require massive processing power, sealing data on a hard drive does.
The sealing can be done by harnessing power from a CPU or a GPU hardware. However, throwing a piece of specialized equipment in the mix makes it faster, allowing miners to seal more data in a day. In return, they also get more rewards.
Chinese Companies are also speculating on Filecoin
But it does not stop at mining. Close to 50 cryptocurrency exchanges in the Southeastern Asian country, including Biki Exchange and MXC Exchange, have FIL futures served with Tether (USDT) on their menu. Note however that this is only an IOU, as the token hasn’t actually been released yet.
Cryptocurrency data aggregator platforms like CoinMarketCap, Feixiaohao, recorded roughly $100 million in trading volume in 24 hours. The price of Filecoin futures, however, has been fluctuating from $11 to $28 to $18 within days.
Some firms dealing in cloud contracts, e.g., Mars Finance, project a 300 percent annual return for FIL miners without providing the amount of FIL tokens each terabyte of contracted space can bring.
Conclusion
Although the mainnet and the rules governing storage mining are yet to be released, the Chinese community has long gravitated towards Filecoin. Some of the reasons behind this craze can be because of China’s uneven domestic investment landscape that has alienated middle-class individuals looking for attractive investment opportunities.
Also, China’s rigid stand on capital controls has led Chinese investors to seek reputable cryptocurrency or blockchain-based projects that can facilitate financial interaction with the rest of the world. Filecoin’s association with leading venture capital firms makes it attractive to the Chinese community. Also, its storage mining tag makes it simple for retail miners and investors.
Disclaimer: Cryptocurrency trading involves significant risks and may result in the loss of your capital. You should carefully consider whether trading cryptocurrencies is right for you in light of your financial condition and ability to bear financial risks. Cryptocurrency prices are highly volatile and can fluctuate widely in a short period of time. As such, trading cryptocurrencies may not be suitable for everyone. Additionally, storing cryptocurrencies on a centralized exchange carries inherent risks, including the potential for loss due to hacking, exchange collapse, or other security breaches. We strongly advise that you seek independent professional advice before engaging in any cryptocurrency trading activities and carefully consider the security measures in place when choosing or storing your cryptocurrencies on a cryptocurrency exchange.
China’s hotly-anticipated nationwide effort to integrate blockchains – the Blockchain Service Network (BSN) – has split into two entities over a disagreement to integrate public blockchains. BSN will now be split into two separate entities:
BSN-China: a private consortium led by the State Information Center. This chain will be China’s core chain with support from the Government. BSN-China will consist of nodes that fully comply with local Chinese laws and regulations
BSN-International: A public consortium led by Red Date Technologies. This chain will allow international co-operation and integration of crypto protocols such as Ethereum (ETH), EOS (EOS), Nervos (CKB), NEO (NEO), Chainlink (LINK) and Tezos (XTZ)
BSN was originally envisioned as a project that would allow any blockchain, be it public chains (eg. Ethereum (ETH)) or corporate private chains to communicate with each other. Following the original plan, any public blockchain can integrate itself into the BSN, a network that will help cross-chain communication and value transfer.
Recently there has been pushback against the use of Public blockchains in China, as it would mean the State would not be able to control these Chains. As a result, the incorporation of public chains into BSN has been a hotly contested subject as the state would not be able to ensure that all aspects of the chain will comply with local laws. In fact, public blockchains are decentralized meaning that they are immune to centralized control and governance. This has lead to the State declining to allow any public blockchains into BSN-China.
It is expected that BSN-China will receive most of the state’s attention and funding. Private projects developed by major tech giants in China, such as Tencent and Baidu are expected to be integrated into BSN-China. This will be the major spearhead develop for China’s nationwide push for blockchain development.
Will Decentralized Protocols be left out?
International efforts to develop and integrate into BSN-International will be expected to continue ahead as planned. Original creators of BSN, Red Date Technologies, will spearhead the development and continue to push the international effort to create a communication network for the entire blockchain ecosystem.
Disclaimer: Cryptocurrency trading involves significant risks and may result in the loss of your capital. You should carefully consider whether trading cryptocurrencies is right for you in light of your financial condition and ability to bear financial risks. Cryptocurrency prices are highly volatile and can fluctuate widely in a short period of time. As such, trading cryptocurrencies may not be suitable for everyone. Additionally, storing cryptocurrencies on a centralized exchange carries inherent risks, including the potential for loss due to hacking, exchange collapse, or other security breaches. We strongly advise that you seek independent professional advice before engaging in any cryptocurrency trading activities and carefully consider the security measures in place when choosing or storing your cryptocurrencies on a cryptocurrency exchange.
China has asked for guidance from the teams behind Cosmos and ChainLink for their Blockchain Service Network (BSN), it was revealed last month. Researchers have called upon both companies to aid their development of the BSN, which was launched alongside their Digital Currency Electronic Payment (DCEP) in April 2020, to help them build out a “service hub” which would form the bedrock of its “internet of blockchains.”
SmartContract and Iris Foundation join BSN Development
According to reports, SmartContract, the group behind the Chainlink oracle network, will aid the BSN team in the sourcing of reliable information. Their Dapp services, potentially on Hyperledger, could allow for a cohesive and more streamline to access information.
Yifan He, BSN expert and CEO of Beijing Red Date Technology, spoke on the ChainLink addition, saying the partnership between the two, will give access to outside data from many Chinese companies, such as financial transaction information from China Union Pay, something difficult to obtain and analyze in the first place. This would then allow for BSN users to access “outside data such as stock prices and financial transactions.”
On the other hand, Iris Foundation Ltd., the company who uses the Cosmos network to integrate businesses using interchain services, will work on interoperability for the network. He described their addition as allowing for “cross-chain services between blockchains adapted in the network.”
Both companies appear to know what the State Information Center and China Mobile/China Union Pay backed BSN needs in their attempts to create a worldwide blockchain infrastructure.
And it seems they have a good chance of pulling it off as the government backing allows greater alliances and interconnectivity between the important players. One of these players and a team that looks integral to the future research is ChainLink.
ChainLink suits BSN
The chance to be part of a huge project was something ChainLink’s co founder and SmartContract CEO Sergey Nazarov, couldn’t miss. Explaining how the BSN might use his company, the co-founder said: “Chainlink provides the blockchain abstraction layer or secure blockchain middleware that enable dapp developers to create universally connected smart contracts.”
Google, through its Google Cloud uses ChainLink for a similar function as he BSN, Nazarov explained. “What BSN really cares about, much like the people we’ve worked with from Google, is this type of contract that allows blockchains to access external off-chain data,” Nazarov stated.
The need is made even greater as blockchain can’t be directly applied to application programming interfaces (APIs) and only universally connected smart contracts can create the connection and allow for off chain data.
This use case is especially needed, Nazarov claimed, for global financial product or insurance, as the contracts must have external data and ensure goods and services are delivered, which needs the universally connected contracts.
The usage of ChainLink and their services are set to continue as Nazarov told CoinDesk, “Chainlink’s technology suits BSN’s vision because the network includes multiple chains that are also supported by (his) team.”
BSN starts to build for future
Since its launch in April, the BSN has been announcing a number of partnerships with experts in the blockchain field. For example, around the initial launch the research team confirmed the plans to adapt Ethereum and EOS public blockchains into the BSN system.
A target area has been cross chain services with Polkadot one of a number of companies earmarked for positions on the interchain service. “We plan to have at least four different interchain service technical frameworks developers can choose from in the hub,” He said.
“The interchain service hub is one of the three critical parts for the national blockchain infrastructure”, He continued adding that enterprise and public blockchains into the network were the other key fields.
Despite not being finalised, the network is already proving popular. ”We have been on-boarding two to three public chains every month on average, while adapting consortium chains at a slower pace since it usually takes longer to integrate them with the network,” He claimed.
However, not all blockchain developers are pleased with the creation of the network, with some developers worried about their data being stolen as well as other privacy concerns. The BSN looked to quell the fears in their recent technical white paper, but there is cause for concern considering the nations stringent Internet laws.
Decentralised Finance (DeFi) series: tutorials, guides and more
With content for both beginners and more advanced users, check out our YouTube DeFi series containing tutorials on the ESSENTIAL TOOLS you need for trading in the DeFi space e.g. MetaMask and Uniswap. As well as a deep dive into popular DeFi topics such as decentralized exchanges, borrowing-lending platforms and NFT marketplaces
More videos and articles are coming soon as part of our DeFi series, so be sure to SUBSCRIBE to our Youtube channel so you can be notified as soon as they come out!
Disclaimer: Cryptocurrency trading involves significant risks and may result in the loss of your capital. You should carefully consider whether trading cryptocurrencies is right for you in light of your financial condition and ability to bear financial risks. Cryptocurrency prices are highly volatile and can fluctuate widely in a short period of time. As such, trading cryptocurrencies may not be suitable for everyone. Additionally, storing cryptocurrencies on a centralized exchange carries inherent risks, including the potential for loss due to hacking, exchange collapse, or other security breaches. We strongly advise that you seek independent professional advice before engaging in any cryptocurrency trading activities and carefully consider the security measures in place when choosing or storing your cryptocurrencies on a cryptocurrency exchange.
China is proposing a plan to create a digital currency for the East Asian region in an attempt to carve out a world away from dominance by the US Dollar.
A report from Nikkei Asia this week unveiled this decision made by the Chinese People’s Political Consultative Conference (CPPCC), China’s political advisory body. The proposal from 10 of the CPPCC members was to create a digital currency that would be backed by a range of fiat currencies, such as the Chinese Yuan, Hong Kong Dollar, Japanese Yen and South Korean Won.
The strongest currencies, the Yen and Yuan, are set to be the main backers but how this will be split will be determined by the strength of each currency at the time. Initial suggestions have said the Yuan will account for 60% and Yen, just 20%. It may appear from this move that China is seeking out allies in challenging the influence of the US and the US Dollar.
This proposal sent waves through the CPPCC as the proposing members were high profile and influential figures such as the co-founder of Chinese travel services giant Ctrip, Neil Shen and Henry Tang, a Hong Kong politician and former Chief Secretary. Both suggested the currency should be made by a private company, rather than the central bank.
The 13th National Committee of the CPPCC opened on 21st May 2020.
Is the the East Asian digital currency a response to Facebook’s Libra LBR token?
What exactly prompted the CPPCC members to come up with this plan is unknown but many believe it could be in response to recent news regarding Facebook and its Libra cryptocurrency project.
The Company had suggested that they will abandon their Libra token plans due to the similarities with the digital Dollar proposed by lawmakers. Instead, they will focus on a multi-currency coin called LBR. It is believed it could emerge as the digital currency of the West, leaving the East behind, as the Libra project has already abandoned plans for a Yen-pegged stablecoin.
China building a world away from US Dollar dominance
The benefits of an East Asian cryptocurrency are clear for Xi Jinping’s China. China, which has seen her economic and political ties with the US deteriorating under Donald Trump’s leadership is actively building a monetary system away from the reserve currency of the world, the US Dollar.
The dominance of the US Dollar has directly enabled the US’ control of global politics. With 70-80% of all worldwide trading being conducted in the Dollar, entire nation’s economies will suffer heavily should they fall on the wrong side of the US’ favour, such as Iran.
China, who has a history of facing the brunt of US sanctions in the past is potentially in the line of fire to be hit by even more sanctions soon. Following the Hong Kong National security law proposal last month, US lawmakers have moved quickly to outlaw it with the threat of sanctions held over China’s heads should they enforce the controversial law.
The threat of sanctions from the US should not be taken lightly either. Just ask Meng Wanzhou, Huawei’s Chief Financial Officer who has been under house arrest in Canada for the past 1.5 years for allegedly trading with sanction hit Iran.
Seeing this problem, China has been slowly looking to build a system away from the US. This tactic was evident when eight-member countries of the Shanghai Cooperation Organization, including China, India, Russia, Pakistan, Kyrgyzstan, Russia, Tajikistan and Uzbekistan, who all decided to trade in local/national currencies instead of the US Dollar at a meeting on March 18th 2020.
However, the shift towards digital currencies is clearly on China’s priority list. China, much like her allies Iran and Venezuela are seeing digital currencies as the future of finance and have attempted to be the leading light in this field.
This was clearly evident with the acceleration of their Digital Currency Electronic Payment (DCEP) project. The currency, which will be tested in Shenzhen, Suzhou, Xiong’an and Chengdu, was created with a purpose of knocking out the US Dollar’s dominance.
How this proposed East Asian currency will fit in with DCEP is unclear, but reports have suggested that it too will be international in its outlook. Recent reports from South Korea has suggested that DCEP could be used by Chinese tourists in the nation, although with no official date for launching the Digital Yuan, how this will work is still up in the air.
What is clear however is that with DCEP and the East Asian Digital Currency, China is escalating her challenge of the US’ dominance through digital currencies whilst the US continues to be tangled up in regulatory issues.
