China might be the first country to turn their static money into dynamic digital code as they are experimenting with ethereum to create a Yuan token according to Andrew Keys from ConsenSys, an ethereum development powerhouse.
Keys says the Royal Chinese Mint is “concentrating on the research and exploration [at] the forefront of digital money, taking part widely in innovation and practice in the fields such as digital currency, mobile finance, smart-city construction and Internet based finance; it also actively promotes the application of blockchain technology in finance and related fields.”
Before revealing that the “Royal Chinese Mint is experimenting with the ERC 20 token standard and Ethereum smart contracts to digitize the RMB,” in a public statement that summarizes the ethereum based developments in China as highlighted in a number of meet-ups across the country.
Among them is the revelation that Ant Financial, the giant tech and payments company, is also experimenting with ethereum. Together with WeChat Pay, they handle the vast majority of all payments in China where digital transactions have gone mainstream with QR codes everywhere.
That’s because the developing country lacks much banking infrastructure as we know it in the west. The internet has allowed them to leapfrog, with the vast majority now just using app wallets instead of opening bank accounts.
Considering this transformation underway, the central bank wants to keep up, starting research back in 2014 on potentially issuing their own digital currency, both as a means of taking advantage of the new capabilities internet based tech offers and as potentially a means of fending-off bitcoin’s popularity in the country.
But, they have been giving mixed signals, sometimes saying digital currencies are inevitable, sometimes saying they have no plans of issuing one. However, it is the first time an ethereum based Yuan token is raised as a potential way of upgrading static fiat money.
A token would give them a lot more flexibility, since its supply can be increased or decreased as they like or if they want to get very fancy they could link it to price data and super complex algorithms which increases or decreases supply based on relevant information with the whole thing running by itself while potentially having the option of manual intervention.
This would be very cutting edge, perhaps bleeding edge. Since we would be looking at a national scale, there would have to be a lot of research, and if they do add fancy things like data analysis through algorithms they would probably need a significant amount of coding talent.
So, realistically, any deployment might take a considerable amount of time, but the very first country to do so might gain a competitive advantage perhaps not dissimilar to the competitive edge some of them gained after laying out the railroad tracks, increasing the efficiency of goods transport, or, in this case, of money transport.
The railroad track would be ethereum, the platform. If we are to envision a token using this platform on a national scale, then we should begin to think ethereum might become critical infrastructure at a global level.
It’s not ready yet. It has to complete its roadmap and get to sharding, but after that, perhaps it can handle even national scale which may mean countries might start a race of being the first to upgrade. That also means they will probably want to start designing the structure and perhaps even try some pilots at this stage so as to be good to go. Something which, it appears, China is doing.
We asked Keys and others for comments so this article might be updated in due course.
Featured image from Shutterstock.
Last modified: May 21, 2020 9:50 AM UTC