Race towards the First “Crypto-Country” in the World

The small European country of Estonia aims to become the first crypto-country in the world. The country is already in the midst of digitizing its government services using Blockchain technology, the tech behind digital currencies like Bitcoin.

The Estonian government’s digitization project reached a whole new level in 2014, with the government’s e-residency program. Under the initiative, any individual around the world can file an online application to become a virtual Estonian citizen. As a digital citizen, he/she can access the same online platforms that Estonia’s physical economy is based on, and the same online public services that domestic Estonians use.

The adoption of Blockchain has also allowed Estonia to introduce an online voting system during national elections. However, only physical residents are allowed to vote under the system. The country is also involved in various public services projects that are powered by Blockchain, including health services, and originally planned for its own digital currency.

Other Blockchain developments worldwide

Aside from Estonia, various countries around the world are also adopting Blockchain in public-sector applications, with the latest EU country vying for the same position being Slovenia.

In the UK, the government is currently piloting a Blockchain-based system for the payment of health benefits claimants. In Russia, Vitalik Buterin has signed a deal with a Russian state-owned bank for the creation of a special national system called Ethereum Russia.

The government of China, meanwhile, has developed a prototype of a prospective national cryptocurrency in the country since June 2017. By September, China decided to better regulate ICOs by banning them and eventually considering licensing options down the line.

In her report, Georgetown University cyber-lawyer, Dr. Clare Sullivan, claimed that the government of Australia is studying ways to replace its separate passport and birth certificate databases with a single Blockchain-based system.

“It is not necessarily cybersecurity concerns that have prevented the increased digitization of government services up to this point, though Blockchain is indeed much more secure than existing systems. Rather, it has been the importance of ‘know-your-customer’ protocols — the need for governments, banks, and other institutions to verify individuals’ identities using physical ID documents and in-person interactions.”

Source : Cointekegraph 

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PBoC Digital Currency Director Calls for Centralized State Cryptocurrency

China may not recognize bitcoin as a legal currency, but it seems to have a clear vision for a state-issued alternative.

At a meeting hosted by the International Telecommunication Union this week, Yao Qian, the Director of the Digital Currency Research Institute under the People's Bank of China, reportedly boasted about the potential of a state-owned digital currency, while suggesting that there is an inherent lack of value anchoring public cryptocurrencies like bitcoin.

According to a report by Yicai, Yao also framed a state-issued digital currency as a way to stabilize domestic fiat currency, while better securing country's financial status.

Although the publication made clear Yao's comments reflected his own opinions, the remarks nonetheless reveal how the country may choose to direct the future development of digital currency.

Yao told attendees:

"The value of cryptocurrencies such as bitcoin primarily comes from the market speculation. It will be a disaster to recoganize it as a real currency. And the lack of a value anchroing inherently determines that bitcoin can never be a real one."

Launched by China's central bank in June this year, the Digital Currency Research Institute focuses on R&D related to blockchain-based digital currency. Currently head of the institute, Yao also served as the deputy director of PBoC's technology department.

Pointed barbs

Elsewhere, Qian had more criticism for public cryptocurrencies.

In yet another statement, he was quoted as saying that the deflationary nature of economic systems utilizing the technology could be a hinderance to their success. "A total cap of 21 million like bitcoin whose current supply also halves every four years is actually driving backward along the currency evolution," he said.

Yao went on to argue that a state-owned digital currency, however, creates tangible economic values and helps stabilize the market position of fiat currencies.

"The nature of a state-owned digital currency is a government liability issued to the public," he said. "And it's backed by the sovereign credibility."

Yet, Yao takes a different approach from current trials of other central banks' cryptocurrency projects that focus on the distributed ledger technology.

Citing the RSCoin design concept by the Bank of England as a promising example, Yao argued that such state-owned digital currency should not be confined by the ideology of the blockchain and DLT.

"RSCoin pictures a system that is controlled by the central bank," he said. "The role of central banks may not just be deciding how much to supply but also designing the rule of the supplying algorithm."

Source : CoinDesk

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Chinese Government Doesn't Understand What is Bitcoin

Throughout the past month, traders and investors in China have criticized the Chinese government's sudden crackdown on local cryptocurrency exchanges and trading activities.

• What happened?

In September, the Chinese government, People’s Bank of China (PBoC), and local financial authorities imposed a nationwide ban on cryptocurrency trading platforms, shutting down some of the global cryptocurrency exchange market’s largest trading platforms including OKCoin, Huobi, and BTCC.

The motive behind the Chinese government’s closure of local cryptocurrency exchanges has not been clarified, but several researchers for the PBoC have stated that the country’s central bank considers Bitcoin and other cryptocurrencies as threats to the Chinese monetary system.

• Supervision strategy?

Last month, in an interview with the PBoC’s state-owned finance news publication Sina, Huang Zhen, a researcher at Central University of Finance and Economics and PBoC, stated:

“Cryptocurrencies and other virtual currencies attempt to challenge the sovereign state's right to issue currency, requiring the nationalization of currency issuance. China has a clear understanding of digital forms of money, and is actively engaging in relevant work. The central bank has set up a research group and a digital money research institute to explore the digitization of sovereign money. After this round of virtual money markets supervision, we expect under the auspices of the Chinese central bank to launch our own sovereign digital currency as soon as possible to help maintain China's leadership in the development of global digital finance.”

Logically, if the Chinese government intends to go ahead with the strategy of issuing a state-controlled digital currency and considers Bitcoin as a threat to its financial system, the motive behind the government in restricting trading activities around Bitcoin and cryptocurrencies is quite clear.

• Or no strategy at all?

But, lately, the Chinese government has expressed its optimism towards releasing a licensing program for cryptocurrency exchanges to prevent cryptocurrency transactions flowing into underground economies and black markets.

Such a sudden shift in stance towards Bitcoin and the cryptocurrency market has provoked consternation amongst traders and investors within the Chinese cryptocurrency community.

Zhang Yanhua, a major Bitcoin investor and a founder of an investment fund focused in cryptocurrencies, stated:

"The authorities don't understand anything about Bitcoin!”

Sun Minjie, another investor who has recently purchased a large amount of Bitcoin as a vital part of its portfolio, told AFP that the Chinese cryptocurrency community and himself do not expect much from the Chinese government any longer:

"I expect nothing from the government... but the fate of Bitcoin does not depend on the Chinese authorities.”

David Yermack, finance professor at New York University, shared a similar sentiment to most investors and traders in China, emphasizing that the Chinese government does consider Bitcoin as a threat to its financial system to a certain extent. But, such fear towards Bitcoin and its potential in the global finance sector should be considered as a positive indicator for long-term growth. Yermack said:

"They didn't ban Bitcoin, but banned exchanges from trading for speculative purposes. It has a lot to do with problems in the Chinese financial system, that they're worried about this as a competitive threat in some way."

Source: Cointelegraph

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BITCOIN IN CHINA: THE RUMOR IS CONFIRMED

The Shanghai exchange platform BTCC, one of the largest in the country, has announced that it will no longer accept new users as of today and that it will cease its crypto-currency exchange operations in China on 30 September. However, it will continue his international activity, and ensure that its mining pool will not be affected. While the signs of a ban on the exchange of crypto-money in China are multiplying, the country's authorities haven't yet made an official announcement.

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