Bitmain Has Its Eyes on Private Central Bank Powered by Blockchain
Jihan Wu, co-founder of bitcoin mining hardware giant Bitmain, discussed the idea of private central bank issued cryptocurrencies and announced Bitmain intends to invest private central bank startups that plan to issue private currencies by using blockchain technology at DC Summit on Wednesday.
Wu demonstrated the importance of private central banks and cryptocurrencies to the future economic ecosystem. He said that, if there is a market for private central banks, there will be too many currencies.
He also quoted from Hayek in his speech, “instead of entertaining an unmanageable number of currencies, markets would converge on a limited number of monetary standards, on which institutions would base the issue of their notes.”
Wu pointed out that bitcoin’s dominance is declining due to the growth of altcoins. However, the market consolidation would not take place in a short time. Security, legitimacy, privacy, decentralization, cost, speed, capacity, applications are the competitive characteristics of cryptocurrency but there is no one “perfect” cryptocurrency and this market needs more cryptocurrencies with various unique attributes.
Regulation and tokens are also hot topic in this industry. The SEC has stated that platforms offering cryptocurrency trading and ICO services would need to be registered with the government if the tokens fall into the definition of a security and of cause tokens will be subject to the regulation of a security .
Wu argued that “regulators need to prepare a good answer on how to deal with such business innovations.”
Then, Wu brought the idea of a private central bank: A private company located in place A, aligned with a committee of retired independent central bankers who live in different places B, C, D, E. They as a whole are a private central bank. He believes that private central bank business model will attract some private companies. Such private central banks can raise citizens’ confidence in the stability of the currency.
Bitmain is very interested in blockchian based private central bank startups that are going to issue private currencies in a legal way and sell it as a service. They plans to “invest in 20-30 startups whose efforts are focused on this unique emerging industry”.
Jihan Wu also appealed to governments and regulators around the world to embrace blockchain and digital currency instead of resisting it as this new industry may bring people a chance to be away from hyperinflation and make the world a better place.