PBoC to create state-sponsored cryptocurrency

Director of the Digital Currency Research Institute at PBoC makes some remarks regarding a centralized  state-sponsored cryptocurrency
14 October 2017   779

PBoC's relatioships with cryptocurrencies have been quite tough lately. Thus, due to the whole China-against-Bitcoin thing, the top cryptocurrency price has fallen. On top of that, according to undisclosed sources, the Chinese government has officially decided to crack down on all Bitcoin and cryptocurrency trading, not just commercial exchanges.

For now, it seems like China is going to go in another direction. On October 12th, Director of the Digital Currency Research Institute at the People's Bank of China (PBoC), Yao Qian, made remarks regarding a centralized  state-sponsored cryptocurrency. Please, note, that  this is Yao's personal opinion and should not be interpreted as an official stance of the PBoC.

Based on a translation of the report provided by ethnews.com, the man claims that a legal digital currency has a stable monetary value function, and a state-backed currency would provide advantages over Bitcoin, which he referres to as a "private currency." He speculates that a state-sponsored cryptocurrency would create tangible economic values, helping to stabilize the relative position of fiat currencies in the marketplace.

The value of cryptocurrencies such as bitcoin primarily comes from market speculation. It would be a disaster to recognize it as a real currency. And the lack of an anchoring value inherently determines that bitcoin can never be a real one.
 

Yao Qian
Director of the Digital Currency Research Institute at PBoC

Yao also argues that the inherent volatility of Bitcoin "diminishes its capacity to serve as feasible currency".

According to Yao, by creating what would effectively be negative interest rates, it may be possible for the PBoC to reduce its target inflation rate to zero, rather than using an inflation buffer (typically 2 percent).

The whole crytpocurrency society continues to wait and see whether the opinions of Yao will result in policies to be handed down by regulators and the PBoC.

Bank of China Filed a Patent to Scale Blockchain Systems

Bank of China has filed a patent application for a process able to scale blockchain systems  
23 February 2018   56

According to a document released by China's State Intellectual Property Office (SIPO) on February 23, the application was invented by Zhao Shuxiang and first submitted on September 28 last year.

The application states that instead of letting a new block store transactions from its previous one, a data compressing system could be used to pack transactions from multiple blocks into what the patent calls a "data block."

For example, when the system receives a request to compress transactions from block 1 to 1,000, it causes a new data block to be formed and temporarily hosted on a different storage system. Then, the system will run the packed data through a hash function with a hash value. After that, the compression system will attach labels in order to identify blocks on the blockchain.

With the use of the described method, the patent claims a reduction in the amount of the data stored in new blocks as transactions mount in a blockchain while ensuring that data from all previous transactions will still be tamper-proof and traceable.

At the moment, the patent in the review process.