Why China Undermines Bitcoin - as It Tests Its Own Digital Currency

The Guardian's UK/US site editor in the Asia Pacific timezone argues that China wants to undermine bitcoin because, behind the scenes, its reserve bank wants to set up its own digital currency — and then reboot the international financial system: The People's Bank of China aims to become the first major central bank to issue a central bank digital currency. While the PBOC's counterparts in the west have taken a more cautious approach, it has held trials in several major cities including Shenzhen, Chengdu, Shanghai and Hangzhou. The benefits of an e-currency are immense. As more and more transactions are made using a digital currency controlled centrally, the government gains more and more ability to monitor the economy and its people. The rollout is also seen as part of Beijing's push to weaken the power of the U.S. dollar, and in turn that of the government in Washington... Alarm in western governments is such that the threat posed by the digital yuan, which could put China out of reach from international financial sanctions, for example, was discussed at last month's G7 meeting. There's additional reasons for China's desire to replace bitcoin with its own currency, various experts tell the site. No central bank relishes the thought of a "parallel currency" — and there's also concerns about consumers being hurt by a lack of regulations, as well as the strain crypto-mining puts on the nation's electricity system. But the Guardian also adds that "The threat of an unregulated alternative monetary system emerging from blockchain technology is a clear and present danger to the Communist party, according to observers." "Jim Cramer, a former hedge fund manager and CNN business expert, said the government in Beijing "believe it's a direct threat to the regime because... it is outside their control".

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