Bitcoin is a truly revolutionary idea that allows people to transact and store value away from the prying eyes of governments. China’s digital currency is just another state-issued currencies that gives the Chinese government even more control over the lives of its citizens. From Peter C. Earle at aier.org:
China’s digital currency has left the testing stage and is set for a full rollout to the entire country and region. For some reason, the major media stories on the topic circle around the issue of Bitcoin, invented in 2009 as an alternative to government paper money.
Just because a money has the word “digital” in the title doesn’t mean it is a form of Bitcoin. It is not. It is nothing more than a government currency with a different delivery system.
- The digital Yuan does not live on a public ledger. It is controlled centrally by Chinese authorities, to be changed if, as, and when political whims require such.
- The digital Yuan is not a peer-to-peer currency but rather requires the use of officially regulated financial intermediation.
- The digital Yuan does not have a market-based valuation independent of the old version of the currency. They are tied together.
- The digital Yuan does not have an algorithmic protocol dictating the production of new assets (akin to money creation), much less an end date at which point no more will be created. It is a currency with a discretionary money supply controlled by the government.
- The digital Yuan is programmable to the point that the currency can be made to expire, thus forcing consumers to use it up by a certain date. This is a twist on an obscure, unconventional monetary policy innovation known as a Gesell currency: expiring money, which gives the issuing government a heightened degree of control over money velocity.
- The digital Yuan permits a new method for surveilling the population, creating new data which can be tracked by authorities. Bitcoin has pseudonymous protections for user privacy.