People’s Bank of China First Central Bank to Issue Digital Currency

[cirr]

People’s Bank of China First Central Bank to Issue Digital Currency

by John Galt

January 25, 2017 20:25 ET



Tonight the People’s Bank of China (PBOC) became the first large national central bank to announce that they would issue a digital currency.

Via Caixan tonight:

PBOC Set to Be First to Issue Digital Currency

The People’s Bank of China (PBOC) completed a successful trial run of a digital bank acceptance exchange, moving closer to becoming the first central bank in the world to issue its own digital currency.

According to sources from the PBOC, the central bank on Dec. 15 completed the trial in transactions and settlements of bank acceptance bills using a digital currency it developed, supported by blockchain technology – a secure digital ledger that records online transactions.

The central bank’s digital acceptance exchange and currency system were put in place and connected for the test run with several commercial banks, including the Industrial and Commercial Bank of China, Bank of China and the private WeBank, the sources said.

In response to the creation of the Internet currency Bitcoin, Chinese monetary authorities have stepped up efforts to develop a government-backed sovereign digital currency. Similar efforts to explore future forms of money are underway by the U.S. Federal Reserve, the Bank of England and the Bank of Canada. Chinese regulators have tightened scrutiny of Bitcoin, which lacks any official backing, and have banned financial institutions from using it.

In addition, a digital currency research institute will be officially set up after the week-long Chinese New Year holiday that starts Friday, sources said. Recruitment to fill several positions in the institute was launched in November, seeking experts in developing big-data systems, cryptography, and blockchain technology.

To the ‘traditional’ central banks, this is shocking news that the PBOC is first. However the speed of the start date will shock many as when the Chinese New Year article ends. More from the article linked above:

When the system is ready, the central bank’s pilot digital bank acceptance exchange platform will be connected with the existing Shanghai Commercial Paper Exchange to form a national platform for bank bill transactions, said a person close to the central bank.

The central bank’s efforts to develop the digital currency started in 2014 when it set up a special research team to study the issue.

The efforts came into the spotlight in January 2016 when the central bank released a statement saying its experts were discussing along with Citibank and Deloitte a general framework for an electronic currency. It was the first central bank to voice support for the concept of digital cash. The bank suggested the digital currency would not only reduce circulation costs but also increase transparency and curb money laundering and tax evasion.

The PBOC says that China’s digital money will be legal tender backed by the central government, unlike Bitcoin, the encrypted electronic currency that can be bought, sold and transferred without a bank. Ultimately, both digital and paper currency will be in circulation, according to the PBOC.

With this option, the PBOC takes a leap ahead in the ability to crush deflation via the Germanic concept of hyperinflation. How, you might ask? Simple. Each digital account can be increased by a percentage based on the calculus of the central bank’s necessity to stimulate economic activity. Think about that; if the economy is slowing down, just add 15% in currency value to Wang Cho’s digital currency card and boom, he’s shopping. The paper currency citizens will see this and rapidly agree to surrender to the digital currency.

The methodology of running concurrent currencies is how the Bank of India should have approached this issue. India sadly got schooled by China on how to phase such a program into practical use.

Even Janet Yellen bows down to this move.

Got Gold?

http://johngaltfla.com/wordpress/20...first-central-bank-to-issue-digital-currency/

@Shotgunner51

 

[cirr]

China’s Central Bank Completes Digital Currency Trial on a Blockchain

Samburaj Das on 30/01/2017



The People’s Bank of China (PBOC) has completed a trial run of digital currency based on blockchain technology.

According to a recent report from Chinese publishing giant Caixin, the central bank completed a trial that saw transactions settled with its own digital currency. Developed by the PBOC, the digital currency was tested on a blockchain and the trial was completed in mid-December 2016.

The trial took place on shared distributed ledger that saw several major commercial banks as participants. The world’s largest bank by assets, the Industrial and Commercial Bank of China along with the Bank of China – both government-owned banks – participated in the trial. So too, did privately owned WeBank, hinting toward a sweeping effort toward the possible digitization of the Chinese Renminbi, the country’s fiat currency.

The report also revealed how the government plans on setting up the digital payment infrastructure, when functional and ready for deployment.

An excerpt from the report reads:

"When the system is ready, the central bank’s pilot digital bank acceptance exchange platform will be connected with the existing Shanghai Commercial Paper Exchange to form a national platform for bank bill transactions.”

Further, the publication also cites sources that point to an exclusive ‘digital currency research institute’ to be setup by the PBOC. The central bank issued a public recruiting call in November 2016 seeking experts in developing blockchain technology, big data, cryptography and systems’ design. As a mandatory requirement, applicants must hold a master’s or a doctoral degree in cryptography, computer science of information security.

The marked public effort toward digital currency & blockchain development and adoption by the central bank has spurred the wider banking sector in China – heavily reliant on paper – to start their own recruitment drive in hiring blockchain experts in recent times.

Early Development

The PBOC is among the earliest known efforts by a central bank to research and explore the possible issuance of a nationwide digital currency. China’s central bank put together a specialist research team as early as 2014, engaging experts from Citibank and Deloitte toward the discussion of the regulatory frameworks required for a national digital currency.

The PBOC has stated its intention to issue its own digital currency “as soon as possible.”

A common consensus from officials points to a “practical and far-reaching historical significance” with the issuance of a national digital currency, if China becomes the first country in the world to do so. The PBOC’s endeavor to explore its own digital currency was only revealed in early 2016, despite having already researched the idea for two years.

A month after the public reveal, PBOC governor Zhou Xlaochuan added “blockchain technology is a good choice” as a non-counterfeiting, non-account-based solution that emphasizes privacy protection.

Separation from Bitcoin

“As a legal tender, digital currency must be issued by the central bank”, stated Xiaochuan in the same interview, who added that a PBOC-developed digital currency “differs from Bitcoin at (from) the very start.”

Perhaps coincidentally, the PBOC has been more prominently involved in looking into the operations of China’s major bitcoin exchanges since the successful completion of its own digital currency trial. The central bank’s “on-site” checks of bitcoin exchanges has the authorities pointing to “irregularities” in the trading platforms’ business practices. Following early inspections, bitcoin exchanges stopped margin tradingoptions and began enforcing trading fees for bitcoin transactions.

Last week, the PBOC confirmed that its on-site inspections of these exchanges “will continue.”

https://www.cryptocoinsnews.com/chinas-central-bank-completes-digital-currency-trial-blockchain/

 

[cirr]

So has any of you guys made shedloads investing/speculating in blockchain technology stocks in the last couple of years?

"Blockchains Offer Revolutionary Potential in Fintech and Beyond"

2/2/2017

by Stuart D. Levi

Skadden, Arps, Slate, Meagher & Flom LLP

Blockchain, the distributed ledger technology that underlies bitcoin transactions, has been heralded as a transformative technology that is as significant as the development of the internet. The enthusiasm for blockchain technology over the last two years has little to do with bitcoin itself. Rather, the distributed ledger technology the blockchain utilizes has myriad potential powerful applications that could fundamentally change the financial services industry as well as any industry relying on the use and sharing of data.

According to an August 2016 study by the World Economic Forum, over $1.3 billion was invested in blockchain technology over the past three years, with more than 90 companies joining blockchain consortia seeking to develop useful applications. In late September 2016, congressional representatives unveiled the bipartisan Congressional Blockchain Caucus to “educate, engage, and provide research to help policymakers implement smart regulatory approaches to the issues raised by blockchain-based technologies and networks.” Rep. Mick Mulvaney, R-S.C., who helped launch the caucus, has been selected by President Donald Trump to serve as the director of the Office of Management and Budget. We expect 2017 to be a watershed year in terms of both blockchain development and how regulators address this technology.

Distributed Ledgers: The Basic Concept Behind Blockchains

The key to blockchain technology is the concept of distributed ledgers. In traditional centralized ledger systems, a single trusted party controls the master database that records all processed transactions. These hubs also serve as a trusted third party through which two unrelated parties can safely exchange items of value. While centralized systems provide key benefits, they lack transparency, add an additional layer of transaction costs and are only as safe as the security of that central database.

With blockchains, distributed ledgers provide the same benefits as a trusted third party, but in a far more efficient and secure manner. In a blockchain, every network user has its own verified copy of the ledger. Through cryptography, distributed consensus networks and other algorithms, each new transaction is verified across the network and then added to the block. Each ledger is updated simultaneously, creating an immutable record. The security of these systems is virtually guaranteed by the fact that a hacker would have to infiltrate more than half the nodes on the network — a virtually impossible task and, in any event, likely cost-prohibitive. Since each transaction is verified by the network, blockchain users can transact directly with each other, eliminating the transaction costs of a central hub. To date, blockchains are divided between those that are “private” or “permissioned” and those that are “public.” In a private blockchain, participation is controlled (e.g., a group of banks that agree to use a blockchain for interbank transactions), while a public blockchain has no limitations on participation.

Blockchain technology could be applied to any system that has historically relied on a central trusted authority for functions such as payment transfers, clearing and settlement. Indeed, blockchains could fundamentally reshape the entire architecture of the financial system. Moreover, since the essence of blockchain technology is to allow for quicker, more efficient and more reliable data exchanges, the blockchain could revolutionize any industry that relies on data. Common examples are the recording and management of chain of title or equity ownership, or the protection and dissemination of personal information. Since any asset can be represented by data, blockchain proponents see new paradigms for the licensing and distribution of intellectual property content, supply chain management and the recording of corporate shares. For example, through its Blockchain Initiative, the state of Delaware is promoting blockchain-based corporate shares. While the state government has acknowledged that multiple regulators would have to join that effort, the state’s goal is to clear the legal path to make the initiative viable.

The Regulatory Environment

Since blockchain technology is still evolving in the financial services sector, no meaningful regulation has yet been issued. Nonetheless, regulators are watching this space closely, hoping to avoid a situation in which they are reactive to technology that has already been implemented. In 2016, the U.S. Federal Reserve, the People's Bank of China, the Bank of England and the Central Bank of Russia all issued pronouncements about the importance of this technology and its potential impact. For example, Federal Reserve Chair Janet Yellen, testifying at a congressional hearing in September 2016, stated that “[blockchains] could have very significant implications for the payments system and the conduct of business,” and that “innovation using these technologies could be extremely helpful and bring benefits to society.” The U.K.’s Financial Control Authority “regulatory sandbox,” which was established in 2014 to create a “safe space” in which businesses could test innovative technology products and services in a live environment while ensuring that consumers are appropriately protected, has placed great emphasis on blockchain solutions.

Regulators also must evolve with the introduction of this new technology. The Securities and Exchange Commission (SEC) has established a blockchain working group that is considering, in part, the need for the commission to have stronger technology expertise to address issues as they arise. More generally, the SEC has focused on gathering information about blockchain technology and how it could impact transfer agents, for example. In 2017, the SEC likely will make more definitive pronouncements on blockchain adoption.

The concept of blockchain regulation is anathema to many proponents of the technology who believe its transparency and decentralization eliminate the need for regulation. Blockchain systems ultimately may lower compliance costs by allowing regulators to take advantage of the transparency of the system and access data directly, but regulators likely will not allow time- and battle-tested systems such as payments, clearing and settlement to be replaced wholesale without some degree of regulatory oversight. Notwithstanding the strong focus on blockchains within the financial services sector, the looming possibility of regulation may result in blockchain systems being implemented in nonregulated contexts first, such as in a supply chain system.

Smart Contracts

Blockchains are rarely discussed without mention of “smart contracts.” The concept behind smart contracts is that machine code would replace or, more likely, supplement legal contracts so the terms of a contract would be executed automatically. For example, the system would be able to verify that a party satisfied its performance obligations and then transfer the applicable consideration from the counterparty. Of course, the numerous subtleties of complex commercial agreements do not lend themselves to being expressed in objective computer code. Nonetheless, many standardized agreements, especially those that are entered into repeatedly within an industry, might be amenable to legally binding code-based solutions. For example, a smart contract in the mortgage context might track and automatically release a lien when a mortgage is fully paid. The concept of smart contracts should advance significantly in the coming year, with regulators — particularly in the financial services space — paying particular attention to the intersection of smart contracts and blockchains and whether they might permit users to circumvent long-established regulatory requirements.

The Road Ahead

While blockchain technology is in its nascent stage, technologists expect it will evolve and be adopted at a much faster rate than other information technologies. Their optimism is based on the fact that distributed, interconnected computers — which are the essence of blockchain technology — are already well accepted and understood, and almost every potential user already has multiple devices connected to the network.

That said, a number of hurdles remain before blockchain technology can be widely adopted. Some have expressed concern that the technology has become fragmented without a coherent direction, which creates confusion in the marketplace and could slow adoption. Others question whether blockchains can efficiently handle large transaction volumes. Companies should closely monitor developments and consider how they might benefit from use of the technology.

http://www.jdsupra.com/legalnews/blockchains-offer-revolutionary-71791/

 

[Götterdämmerung]

Digital currency? No thanks!

 

[LowPost]

Digital currency? No thanks!

Apologies for my late reply, but if you're hinting at the gradual abolition of hard cash worldwide, like in India recently, I can see what you're getting at.

 

[Götterdämmerung]

Apologies for my late reply, but if you're hinting at the gradual abolition of hard cash worldwide, like in India recently, I can see what you're getting at.

That's exactly what I meant.

 

[AndrewJin]

Digital currency? No thanks!

Your comment is always predictable on this issue.

 

[Keel]

If we don't want to let the world know about the money that will be appropriated to important strategic researches/projects/transactions then keep the digital thingies off to a certain limit as much as we can

OBOR would be an exception ... and AIIB etc

 

[Götterdämmerung]

Your comment is always predictable on this issue.

I'm not into alternative reality.

 

[AndrewJin]

I'm not into alternative reality.

How about the viewpoints from German Alternative P?

 

[Götterdämmerung]

How about the viewpoints from German Alternative P?

They are a fraud, a pile of old NATO/ Banking/ shit with a new packaging.

 

[AndrewJin]

They are a fraud, a pile of old NATO/ Banking/ shit with a new packaging.

Why? I thought they were like Trumps

 

[LowPost]

They are a fraud, a pile of old NATO/ Banking/ shit with a new packaging.

I learnt from Ken Jebsen, a name you might be familiar with, they support neoliberalism according to their party programme. Germany's political landscape is a joke anyway, so...

I'd like to think comparing public opinion about politics in Germany with a corrida is an accurate analogy. Imagine the bull represents the masses, with the AFD being the cape and the 1% trying to fool us is represented by the bullfighter.

 

[Götterdämmerung]

Why? I thought they were like Trumps

Even if Trump really meant what he said, by the end of they day he'll realise that the deep state has him by the ball. So, it doesn't matter who and what Trump is.

I learnt from Ken Jebsen, a name you might be familiar with, they support neoliberalism according to their party programme. Germany's political landscape is a joke anyway, so...

I'd like to think comparing public opinion about politics in Germany with a corrida is an accurate analogy. Imagine the bull represents the masses, with the AFD being the cape and the 1% trying to fool us is represented by the bullfighter.

Very good analogy. AFD is nothing but a mirrage to hypnotise the masses.

Yes, I know Ken Jebsen.

 

[LowPost]

Digital currency? No thanks!

To come back to the actual topic of the OP, the issue you're alluding to is one of the core reasons why I have a rather negative outlook on the world and why I believe we'll be headed towards a global disaster, in form of anarchy, bank runs and even civil wars etc.

The usual reasons to justify the abolition of hard cash, such as fighting money laundering, terrorism, bank robberies can be easily refuted by the damage caused by cybercrimes. This seems to be exactly the means the cartel is employing in order to wipe out the subsistence of blinded world population, thus causing the conflicts mentioned before.

What the aftermath will be is something I'll leave you to imagine.

Yes, I know Ken Jebsen.

Assuming you're following him, what are your thoughts?