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Bitcoin vs PBoC’s digital currency: Expect a dump?

When the PBoC’s digital currency that will conform to the existing central – commercial bank arrangement is out later this spring, it would have an impact on the use and price of Bitcoin which BTCC’s co-founder Bobby Lee recently tipped would be worth between USD$5,000 and USD$11,000 by 2020’s block halving.

Though the form a competition between the Chinese government-backed digital currency and Bitcoin would take has not yet been ascertained, there have been concerns in the cryptoworld that China’s release of a currency which would likely be the first of its kind will be pretty bearish for Bitcoin – there are talks of FedCoin in the US and RSCoin in the UK.

This is premised on the view that Bitcoin is way too small to be a danger to the yuan. Rather, on the release of the new digital currency, it may bring about a likely worst case scenario that would see a dump in Bitcoin dropping its price by 10% to 50% depending on the availability of new information such as whether the China-backed currency would be on the blockchain.

China’s issuance of a digital currency would make monitoring the flow of funds easier for the PBoC to have greater control over its use. Also, as there has been a wider embracing of digital currencies by financial institutions globally, China is one of the major countries seeking to introduce their version to improve efficiency and greater transparency in the global payment system and to stem capital outflow which reached an estimated $843 billion in the 11 months through November 2016 according to a Bloomberg estimate.

However, despite being a major determinant of Bitcoin price and considering the regulatory measures being put in place in the country, the Business Development Lead of a leading Japanese Bitcoin exchange, Coincheck, thinks China’s proposed release of its digital currency would only attract more interest to Bitcoin rather than reduce its value.

Kagayaki Kawabata notes to 8btc via email.

“Chinese regulators are not encouraging bitcoin adoption, but are also not forbidding it. The release of China’s digital currency will empower Chinese government enabling them to regulate the flow of money even more. I think this movement will accelerate demand for a decentralized network like bitcoin attracting interest from people living in a country with strict monetary policy.”

This outlook will fit more perfectly if the digital currency to be introduced is controlled by China in a centralized system and is not totally different from the fiat that is available today which is prone to inflation hence likely to drive users to Bitcoin as an alternative.

Since China’s Bitcoin trading volumes dropped by approximately 33% after PBoC’s regulatory checks on exchanges, Japan has taken over as the top Bitcoin trading market having overtaken the US earlier in the second spot. Kawabata thinks the situation which they had not expected would be the case some two years ago, will remain the same as long as the trend continues.

He says:
“After the suspension of withdrawal, the liquidity of Bitcoin plunged in China. Chinese bitcoin traders suddenly couldn’t trade like before looking for a market with high liquidity. If Chinese government and other countries decide to strictly regulate bitcoin, it can bring in traders all around the world to Japan uplifting bitcoin market in Japan even more.”

With top Chinese exchanges such as BTCC, OKCoin and Huobi resuming full scale operations in coming days, they are expected to make frantic efforts to reclaim their dominance in the market not only from traders that have switched to Japan but also those that now look to the over the counter market for their transactions especially LocalBitcoins users. Latest figure shows that more than CNY50 million was traded through the online Bitcoin marketplace in the week ending February 25.

COMMENTS(13)

  • hl5460
    4 months ago hl5460

    When the PBoC’s digital currency that will conform to the existing central – commercial bank arrangement is out later this spring, it would have an impact on the use and price of Bitcoin which BTCC’s co-founder Bobby Lee recently tipped would be worth between USD$5,000 and USD$11,000 by 2020’s block halving.http://news.8btc.com/bitcoin-vs-pbocs-digital-currency-expect-a-dump

  • notthematrix
    4 months ago notthematrix

    Closed blockchain tokens is no bitcoin.in notting more then a fancy spreadsheet , not different from debitcard.this happned to a other closed blockchain https://twitter.com/TuurDemeester/status/837474331613609985the power of bitcoin is that anybody can make a wallet , without any question.China is not so important as we found out see price ,  end yes most likely there will be a correction somewhere  but that is not a PBOC dump , because bitcoin DOES NOT  CARE!Because you can only dump coins ones , unlike fiat were banks can make “coins” out of thin air….Making extra bitcoins out of thin air to dump them on a market is imposible its is the most secure imutable form of transaction , it is digital gold.

  • INRI666
    4 months ago INRI666

    Why do Chinamen love to use scare tactics to try to make us dump our Bitcoins? Ok sure by that time there will be a dump to 2100 dollars and it will slow low move back up to 5000 again.

  • Dmitry.Vastov
    4 months ago Dmitry.Vastov

    Quote from: INRI666 on March 03, 2017, 11:25:23 AM
    Why do Chinamen love to use scare tactics to try to make us dump our Bitcoins? Ok sure by that time there will be a dump to 2100 dollars and it will slow low move back up to 5000 again.

    It is what it is. Bitcoin is a serious threat to them. They dont want to lose. Thats why they spread FUDs to create panic and sell their bitcoin that eventually will cause price drop. Dont know why they do this. Maybe to buy cheaper coin. But seems FUDs these days is not that effective than before. I guess bitcoin users now are getting mature because we’re not easy to fool.

  • notthematrix
    4 months ago notthematrix

    The power of math is so strong that is can not be seen by most people.21.000.000 is all that will ever be in bitcoin space , and that is why bitcoin is just at the beginning.https://www.youtube.com/watch?v=6ZCVQHtD2l4this seminar  of andreas antonopolis tells it all.

  • aso118
    4 months ago aso118

    If a person feels safer holding Bitcoin than Yuan, there is no reason why he will buy the PBOC alt.The PBOC alt will be nothing different from a digital yuan. No threat to bitcoin whatsoever.

  • Kprawn
    4 months ago Kprawn

    Why would a centralized glorified ledger be more attractive to investors? This might sound crazy, but if something like this happens and China areforced by their government to abandon Bitcoin, then other countries will have more coins to trade with. Bitcoin is a global currency/commodity andit will still have value, even if the Chinese exit the scene. They will actually do us a favour, when this happens… because a dump will lead to cheapbitcoins and I just LOVE cheap bitcoins. 

  • BitcoinAllBot
    4 months ago BitcoinAllBot

    Here is the link to the original comment thread. Or you can comment here to start a discussion. Author: 8btccom

  • n1ghtfly
    4 months ago n1ghtfly

    Don’t expect a dump as the PBOC’s currency is centralized and at the end is just a digital YUAN controlled by the central bank.

  • freedombit
    4 months ago freedombit

    Nope. The passionate people vested in Bitcoin are here for the solidarity of freedom from political influence.

    Unless China can solve the block size problem…. 🙂

  • GayFrog5000
    4 months ago GayFrog5000

    LMAO PBOC launches own shitcoin backed by fiat currency

  • IconFirm
    4 months ago IconFirm

    Epic PBoC fail.

  • bonrock
    4 months ago bonrock

    Yeah LMAO is right! Everyone watch out! PBoC’s centralized currency is coming! Try not to get too excited. LOL

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