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PBoC Counselor: Blockchain Has No Future If Tangle with Cryptocurrency

“Blockchain has no future if it is mixed up with cryptocurrencies; Do not apply blockchain to the financial sector; Digital currency issued by private organization has by no means good prospects”, an PBoC’s Counselor spoke in a harsh tone at the 2018 Bo’Ao Forum for Asia in China.

On the blockchain-related panel of the conference, a group of government officials and business luminaries including Li Lihui, former president of the Bank of China and director of the Blockchain Working Group at China’s National Internet Finance Association (NIFA), PBoC’s (People’s Bank of China) counselor Sheng Songcheng, as well as Ellen Richey, VP of Visa, Chen Lei, CEO of Xunlei, Hong Won-pyo, CEO of Samsung SDS, discussed the latest blockchain development, as well as future regulation and prospects over blockchain.

Cryptocurrency may hamper the implementation of monetary policy

The PBoC’s counselor, Sheng Songcheng voiced that bitcoin, as the earliest application of blockchain, is not a currency, which has been a consensus reached by the majority of central banks over the world. The issuing power of any currency shall be at the hands of the governments. In his view, if cryptocurrencies are rampant in the market, it will be difficult for the country to carry out its monetary policy, and thus economy management is hard to control. So it is good for blockchain to keep away from cryptocurrency.

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Sheng also argues that applying blockchain to the financial payment system may lower the efficiency. He suggests that blockchain shall be applied to scenarios in need, rather than to the traditional payment system which has basically met the payment requirement. Speaking of digital currency, Sheng believes that digital currency issued by private organizations has no prospects, and he also admits it is actually not easy for the government to promote digital yuan to be accepted by the whole society.

Large-scale blockchain applications is foreseeable within 3-5 years

While Li Lihui, the former head of the Bank of China, believes that large-scale blockchain applications in the financial sector is foreseeable within 3-5 years. It relies on the realization of four elements:

  1. Higher efficiency
  2. Highly reliable
  3. Cost-saving
  4. Regulatory framework

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“Though blockchain technology development has seen a major progress in China last year with blockchain projects launched by tech giants as Baidu, Alibaba, Tencent, JD and Huawei, our regulatory initiative is lagging behind.”

Building a standardization framework and formulating better regulations are among the top priorities, and also big challenges blockchain faces in the realization of practical application.

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