China competes with the US for blockchain leadership. Does the digital CNY expand the Chinese market?

The Chinese President Xi Jinping is now referred to as the “father of virtual currency”. He recognized blockchain as an innovative technology and said China would lead the industry. Facebook CEO Mark Zuckerberg, who launched the cryptocurrency project Libra, said, “If the United States doesn’t do it, China will do it.” China’s trends are very important in turning to blockchain and virtual currency. We asked Johnny LYU, VP of KuCoin, a cryptocurrency exchange with over 5 million registered users, about trends in the Chinese market.

—What has changed in the Chinese cryptocurrency market?

Johnny: There were three major changes. First of all is funding. Until now, ICO was the representative fundraising method in the early days of business, as many projects do.
ICO (Initial Coin Offering) means that the cryptocurrency exchange sells tokens on behalf of the project. And the project that is still in the development stage sells tokens cheaply in exchange for investment in development funds. This kind of tokens are called as test net tokens. Especially, Ethereum attracted attention and raised a lot of money. However, regulations have been strengthened by the occurrence of scams that escape with the funds raised. As a result, funding through IEO (Initial Exchange Offering) is now becoming mainstream. On IEO, the cryptocurrency exchange reviews and announces projects. In addition, since the listing after the implementation has been confirmed, investors can invest without anxiety. The economic model of the token has also changed. It has shifted from the team reserve to the community token with not reserve. The way of capturing tokens is evolving, like Token burn; that increases the value of virtual currency by reducing the number of issued virtual currency or Staking; instead of contributing the security of blockchain by using a locked state without using virtual currency, that gains a thin profit.
And the market is also changing. After various troubles and accidents, the entire market became cautious and risk management was rigorously checked. The blockchain industry faces many changes in China and appears to have developed significantly.
About the evolution of business models, China can be said to be the world leader in capturing the companies needs and changes.

-Do you have any chance to talk with the Chinese government?

Johnny: Yes. Our exchange has the opportunity to talk not only with the Chinese government but also with the governments of each country. Legislation is very important for the development of the blockchain industry, so we gather information by talking with countries that already have legal development. We would like to create a new business from those conversations.

The timing for the Chinese government to accept blockchain technology was earlier than expected. In future, the time will come when the laws of the blockchain industry around the world will be complete. We will discuss and actively cooperate with the government to further accelerate this positive trend.

– The Chinese government has started a policy that makes use of blockchain technology. Let us know about the current situation in China.

Johnny: Last year, China has contributed most to the innovation of the blockchain industry in the world. China is developing differently from Europe and the United States, the birthplace of the cryptocurrency, crypto assets, and blockchain industries.
Bitcoin was invented in Europe and the United States and spread around the world, and various engineers conducted research.However, there were almost no cases applied to business. On the other hand, China has been making efforts to incorporate blockchain technology into business and life for the past two years. As a result, China has become the country where cashless payments are most frequently used. Chinese mobile payment tools “WeChat Pay” and “AliPay” are world famous.

Remittance using blockchain technology is superior in safety, so I think that it will develop the fastest and spread widely in China.
The next day of the Chinese President Xiu said “We will actively develop blockchain technology,” the digital currency electronic settlement “DECP” from the national central bank, a stable coin called “Digital RMB” Stable virtual currency) has been issued and has attracted worldwide attention.

-What changes do you think will result from the issuance of digital CNY?
Johnny: Digital CNY will be used as a core part of the Chinese economy and will definitely have a positive impact on the market.Vice Chairman Huang Qi Ho of China’s Monetary Policy Organization “Chinese Finance 40 People Forum” said:

“The importance of electronic payments in digital currency (DCEP) is not to digitize the existing currency, but to replace the reserve currency itself. Useful for original distribution and internationalization ”
“DCEP also provides real-time data collection related to currency creation, books, and provides useful reference materials for currency allocation and monetary policy implementation.”
Facebook CEO Mark Zuckerberg stated that “If the United States doesn’t admit Libra, we can catch up with China.” China has long been developing blockchain. It was just not publicized. Since the announcement of Libra, China has announced that.

Actually there is almost no difference. The concept of digital CNY is similar to Libra. Rather than controlling the price of a virtual currency in one country, a stable coin system is formed in many countries. Even if the countries are different, when you have an advanced mindset, you may end up in the same place. However, I think that audits to protect economic safety will make a difference in each country.

Blockchain industry in China has already evolved to the top level in the world. As the digital CNY spreads, the speed will accelerate.

-Thank you for telling a valuable story

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Writer/Kaori Shu Editor/Yosca