China has announced that it is about to go public with its national blockchain platform . Yes, the country will make the leap to cryptocurrency, as part of a plan for the digital transformation of the economy. But its implications, more than economic, seem to refer to privacy issues.
This platform will be directed by the State Information Center. The future Blockchain Service Network (BSN) will launch commercially on Wednesday April 26 globally, and companies and software developers will be able to connect to BSN and build blockchain with it. The problem is in its form of implementation.
There are already agents involved in this operation who consider that this is a new way of tracking not only the money that is moved in the country but also that of the citizens, due to the traceability of the blockchain itself.
This platform will seek to offer open access for communication on the blockchain that also embraces cooperation and innovation among joint ventures that have already taken on the initiative. This also aims to be “the only global infrastructure network innovated by China, whose access to it is also controlled by China,” explains the BSN Alliance.
This is the crux of the matter; Blockchain networks are often seen by economic authorities as sources of speculation and systemic risk, in addition to presenting centralization problems. The People’s Bank of China considered opting for distributed accounting, but has decided to understand its virtual currency in an intermediate approach, between decentralization and centralization.
The problem is that this currency could be implemented within a year trying to establish itself as a new payment system, that it will use its own app and that in the future it will try to establish itself as an alternative to current payment systems. The traceability and “transparency” of these types of chains make it possible for the Chinese government to take advantage of these characteristics to use them as an element of control over the population.
The payment system with the Chinese virtual currency DCEP (Digital Currency Electronic Payment) is linked to the Renminbi, the currency of China, and aims to be a virtual currency built on blockchain with 1: 1 conversion. The goal is for this currency to become as relevant as the dollar, and the People’s Bank of China has been working on this virtual currency for the past 5 or 6 years.
A recent article in the IEEE Espectrum newspaper suggested that BSN partners, be they companies, suppliers or developers, could refuse to enter the BSN, since a unique access code is required to stay at the root of the platform. The problem is that this fact would allow the Chinese State Information Center to see the transactions made on the platform.
The BSN-related document doesn’t exactly specify whether authorities could monitor transactions, but it did make clear that transactions within an app would remain private to each other. But he did not clarify anything about the Government.
This is explained by Edith Yeung, manager of blockchain-focused venture capital firm Proof of Capital: “If the government has access to everything through carefully selected nodes, the government will develop and maintain everything, so there will be no more cash It is difficult to commit fraud if all the telecommunications, banking, transport and banking firms like AliPay or WeChat are part of the government network. “
Thus, China plans to launch its centralized digital currency sometime this year, thus becoming the first major nation to issue a CBDC if its plan to launch DC / EP in 2020 is met.