At Government-Backed Chinese Conference, Bitcoin is Called “Disaster”

On October 12, in Beijing, the First Workshop on Standards for Digital Fiat Currency (DFC) for Universal Finance Access was held by International Telecommunication Union (ITU) and the Institute of World Economics and Politics at the Chinese Academy of Social Sciences (CASS). Also involved were the People’s Bank of China (PBoC), the Institute of Digital Money, the Chinese Academy of Information and Communications Technology and the Digital Fiat Currency Institute.

The workshop organizers invited professionals, officers, and entrepreneurs from more than 40 countries to discuss the future of digital currency. The topics of the workshop included the regulation the problems inherent in digital currency. Chinese scholars showed their interest in the idea of state-issued digital currency and steadfastly refused to recognize the value of a public cryptocurrency such as Bitcoin.

Yao Qian, the Director of the Digital Currency Research Institute of the People's Bank of China, is the representative of the Chinese scholars. In his speech, he pointed out the importance of the state’s endorsement of digital currency and questioned the value of Bitcoin. He believes that a public cryptocurrency like Bitcoin lacks inherent value, which makes it unreliable.

“The value of a cryptocurrency like Bitcoin primarily comes from the speculation of the market. It will be a disaster if countries recognize Bitcoin as a real currency. The lack of a value anchoring inherently determines that Bitcoin can never be a real currency.”

Besides Yao, Bilel Jamoussi (officer of ITU), Njuguna Ndung‘u (former Governor of the Central Bank of Kenya) and Muhammad Arif Sargana (Director at Pakistan Telecommunication Authority) all delivered speeches. Some scholars believe that by issuing the state-owned digital currency, countries could stabilize domestic fiat currency and secure countries’ financial status.

During the past few months, the Chinese government has been harsh toward cryptocurrency. Its shut down of ICOs and closure of Bitcoin exchanges temporarily caused a dramatic decrease in Bitcoin’s value. Now that China has started to organize a discussion about the potential of state-issued digital currency, one wonders if China plans on issuing its own fiat-backed cryptocurrency.