China has decided to kick online currency Bitcoin while it’s down by proposing the launch of an official virtual money system.
The people’s Bank of China banned Bitcoin from China in 2013, citing concerns about keeping track of users and money laundering.
Now, the bank has announced that since then a specialist team has developed an online currency strategy.
When the banning notice was issued stopping Chinese domestic banks from trading in Bitcoin, China was the virtual currency’s largest market.
The move does not bode well for Bitcoin, as the Chinese are likely to keep the door closed on the currency in favour of their own system.
Controlling money supply
The People’s Bank said: “Our research team has developed a framework for a new virtual currency and is now pushing on to set up objectives for a launch and overcome the technical barriers.”
The bank is collaborating with foreign banks to work out how a virtual currency can sit alongside card and cash based systems.
Officials also explained that switching to an online currency helped the government to control money supply and cut the costs of managing paper money.
No dates have been given for the release of the yet unnamed currency, but the order has been given to go ahead as soon as possible.
The move comes at an important crossroads for Bitcoin.
Bitcoin has failed, says developer
Leading Bitcoin developer Mike Hearn claims Bitcoin has failed as the price continues to fall.
In December 2014, one Bitcoin was worth US$1,147. Today the price is around $383.
The objective for Bitcoin was to be free of regulation by any central bank and for the price to float freely.
The ideals were hijacked by crooks who could operate freely in an unregulated space to rip off genuine investors.
The short history of Bitcoin is littered with fraud and scandals.
The Chinese version is likely to be much different. Firstly, the currency will be regulated by China’s central bank and supply and the value will be closely monitored by the state as well.
Chinese technology also has a reputation for being clunky.
The government has tried to develop versions of search engines, computer operating systems and other popular software and most have failed or been plagued with technical issues.