LONDON, UK / October 16, 2020, With 70% of nations claiming to be in studying their own digital versions of money, China is by far the biggest one to embark on such a journey. China’s official state-run news agency, Xinhua, quoted President Xi Jinping as saying that blockchain serves “an important role in the next round of technological innovation and industrial transformation.”
The release of the e-Yuan has attracted worldwide attention from investors hoping the cryptocurrency will reach heights to parallel those achieved by bitcoin. However, it is yet unclear to what extent China will include the cryptocurrency in its financial system as international skeptics argue that the currency will never be fully decentralized.
E-Yuan may provide a solution for Chinese long-standing bad debt problems. The country currently has 2.4 trillion yuan ($341 billion) of officially recognized bad debt due to the illegal yet popular practice of obtaining multiple loans pledging the same collateral.
“Using smart contracts provided by the e-Yuan currency, the government of China will be able to track assets and liabilities and to ensure that multiple loans are not taken over the same collateral”, says a senior blockchain researcher J. Rothers.
The circulation of the currency will be controlled by the state and only authorized brokers and banks will be able to sell the cryptocurrency initially.
It is yet unclear whether the currency will be backed by any physical assets. China is known for recently purchasing large amounts of gold to back it’s fiat currency Yuan. It is likely that if the value if e-Yuan falls, the government would step in to provide physical asset backing in order to stabilize prices in investors’ favor.
After the e-Yuan announcement, Chinese technology stocks have been steadily reaching new record heights with Foreigners recently spending over $26.99 Billion on technology stocks listed on the Shenzen stock exchange. All of this provides great returns for both e-Yuan and Chinese technology stock investors.
Many investors have been searching for high-potential stocks after the recent pandemic-related crash and this could prove the opportunity of a lifetime for many. E-Yuan may not only solve China’s long-standing problems but allow many middle-class individuals to move up the financial ladder through a secure investment strategy. Bitcoin’s price rose from $0.003 in March 2010 to almost $10,000 in March 2020. Will e-Yuan follow its path?
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