Aside Control, China’s Proposed Digital Currency May Have Another Use – Ethereum Co-Founder
Ethereum’s co-founder, Joe Lubin, may have hinted at an unconfirmed use case for the Digital Currency Electronic Payment (DCEP) project proposed by China different from the control of trades and citizens’ flow of money as some insiders have suggested.
Keyu Jin, professor of economics at the London School of Economics sees the digital currency’s introduction as like in a consensus with other central banks “to have control of money and money supply and the seigniorage that comes along with it.”
But for Lubin, who also shares the view that China is warming to the distributed ledger technology to be able to control it, he added in a Squawk Box Asia on CNBC that the digital currency could be to enhance interoperability among global systems after explaining why he thinks China has no reason to use a decentralized system like blockchain.
“The blockchain technology brings decentralization. From decentralization, you get trust. China is probably not interested in that aspect of blockchain technology. They, I believe, will bring a digital RMB to China that makes use of some of the elements, some of the cryptographic primitives , of blockchain technology but there is no real reason for China to make use of the decentralizing aspect of blockchain technology. It’s possible if there is a number of different actors in the system, not just the central bank that they will use the fuller aspect of blockchain technology. But again, the digital RMB is probably just about bringing a digital aspect of the currency rather than a decentralized aspect.
On what could be done with the DCEP as related to control, he says:
“I think the central bank and the government have very significant control already. My guess is that it would be used to maintain the control that they have but also to potentially enable the inter-operation between more public systems or more global systems.”
Lubin adds that in a defined global world, “projects like Ethereum which are massively decentralized across the planet can bring a trust characteristics to many sort of interactions” that can expand across borders and hopes that “there would be some sort of openness to using the global public mainnets that are available.”
Should Lubin’s projection be a true reflection of what China is planning, it would give existing blockchains a role to play in the future, especially as some of them have started working on interoperability initiatives.
Ethereum, as well as other smart contract platforms, has been spearheading discussions on bridging the technical and community gaps between chains. At the just-concluded DevCon 5, Ethereum, whose interest to spread wider in the Asian market – where several rivals to its dominance have emerged – has increased of late, engaged other platforms on the possibility of interoperability.
Just last month, NEO partnered nahmii, a scaling and interoperability solution, to bring increased throughput, lower fees and faster transactions to NEO and also bridge NEO with ETH while there are plans to link it with Bitcoin. The nahmii protocol, which uses smart contracts to manage on-chain transactions, will allow for seamless atomic swaps between ETH and NEO and their respective tokens.
“The porting of nahmii smart contracts to NEO will help NEO to improve its scalability and interoperability, which is a big plus to the development of massive adoption on NEO,” says Sarah Song, the Ecosystem Growth Manager of NEO Global Development.
The Loom Network is also working in to help other platforms integrate with others.
A Chinese government-backed digital currency at the base for more public or global systems connecting various sources will be an early rise for the Asian giant. Not to be in control but to coordinate and share experiences right from the start presumably giving China a research and development edge over countries that may join later. This proposed important role looks promising for China if only Lubin’s guess is ascertained.