After years of speculation and development, China’s national digital currency is beginning to roll out. Although this event has been highly anticipated and has often been touted as a milestone for the crypto space, China’s digital currency is actually a case example of how cryptocurrency and blockchain technology can be used for evil.
China’s national digital currency, which is essentially a Chinese Yuan (CNY) stablecoin, is apparently being referred to as digital currency, electronic payment (DCEP).
Research and development of DCEP began in 2014 when the Digital Currency Research Institute was established, and DCEP has finally begun its live testing stage as of April with a limited rollout in Shenzhen, Suzhou, Chengdu, and Xiong’an.
It is unknown when DCEP will be deployed across all of China, although when it is deployed it will happen very quickly since almost all Chinese citizens have mobile phones.
Unfortunately, it appears the main purpose of DCEP is to increase the power of the government over individuals and the financial system, and this is tied to the steady disappearance of physical cash in China.
Basically, cash is becoming increasingly scarce in China, and DCEP appears poised to replace cash. Cash gives people a degree of anonymity, cash cannot be traced, and cash can be hidden, which are all things that the government does not like.
China is limiting the availability of cash under the guise of fighting crime and terrorism, and this is the common excuse used by any government when eliminating civil liberties.
In any case, DCEP could become the new cash in China once physical cash totally disappears, and this poses serious problems for Chinese citizens.
Although DCEP operates similar to Bitcoin (BTC), with the ability to send money instantly and securely between wallets via a blockchain, the main difference is that the Chinese government is in full control of the network.
The Chinese government will be able to trace every transaction, especially since identities will be attached to each wallet. If DCEP totally replaces cash, anonymous financial transactions will no longer exist.
Even worse, the Chinese government could freeze or seize money from any wallet they choose, in addition to being able to reverse transactions. This system will give the Chinese government full control over every individual in China, since if a Chinese citizen breaks any law or says anything bad about the government, all of their money could disappear in a moment.
Indeed, looking into the mechanics of DCEP reveals just how dystopian it is. First off, each DCEP wallet will be directly connected to and controlled by the Central Bank of China, as well as being connected to a commercial bank. Therefore, not only will the government be able to do anything they want to a citizen’s DCEP wallet, the bank has full control as well.
Also, a government run Records Center functions as the node for the DCEP blockchain, and is in complete control of which data is disseminated to the blockchain, including issuance, transfer, and settlement of all transactions.
Therefore, the DCEP blockchain is certainly not immutable, and the Records Center can change the blockchain whenever they want. Literally, the Records Center could make someone’s money disappear, and make it look like that person never had any money by erasing the history.
Another center called the Identification Center onboards new DCEP users by collecting their full identification info, and after that they issue login credentials. Therefore, no one can use the DCEP without handing over their full identity, and the system will be completely non-anonymous.
The final facet of DCEP is the Big Data Analytics Center, which uses advanced algorithms to detect any money laundering or unusual activity. This opens the door for a situation where a Chinese citizen can have their money frozen just because a robot flagged their account.
China’s new national digital currency is a dystopian nightmare, and is the epitome of how cryptocurrency technology can be used for evil. Once DCEP is fully deployed, the government will have power over the people like never before in history, and the last vestiges of freedom and civil liberty in China will likely be eliminated.