Opinion: China or develop official digital currency on WeChat

If China wants to consider developing an official cryptocurrency, there is no better platform than WeChat.

The Libra project developed by Facebook has inspired Chinese cryptocurrency policy makers. If Facebook launches its own virtual currency so that users can trade on its platform, then one of China's largest digital payment operators will also Is that true?

The South China Morning Post reported on Monday that the Chinese central bank began considering the development of an officially recognized cryptocurrency for the first time after the virtual currency ban issued two years ago. For them, there is no social carrier more suitable than WeChat. WeChat is a social media platform owned by Tencent. It is a two-function function of basic social software and digital payment system.

Concerns are concerned that Facebook's Libra may pose a challenge to China's cross-border payments, monetary policy and financial sovereignty.

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“If Libra is widely promoted globally… can it function like a real currency, which has a major impact on monetary policy, financial stability and the international monetary system?” Wang Xin, Director of the Research Bureau of the People’s Bank of China, at Beijing University Asked at a meeting of the research center.

In June, Facebook released a white paper on its blockchain-based payment systems and encryption projects.

On a global scale, WeChat has 1.1 billion monthly active users. Social media companies also tend to use WeChat because it better displays effective active users on the platform.

In contrast, Facebook has 2.3 billion users, twice as many as WeChat; it also means that many people may use the company instead of the country's physical currency.

WeChat already has its own payment system, but its transactions only support RMB and Chinese bank accounts. According to the company, Tencent’s WeChat payment service was launched in 2013 with more than 900 million users.

The usage rate of WeChat payment is growing strongly in China and overseas, but it is mainly used by Chinese expatriates and travelers. Although WeChat has a Facebook-like platform, Alibaba's Alipay is its biggest competitor, and their market share in China is almost equal.

Alipay is part of Alibaba Group's financial division Ant Financial, the world's largest private financial technology company.

However, the Chinese central bank seems to be communicating with WeChat developers in May, and they even plan to follow Facebook's Libra project until domestic regulators can better manage the circulation of virtual currency.

Facebook opened Pandora's box in China. It is unclear whether Tencent is forced to ban the use of cryptocurrencies on WeChat, or that developers themselves do not want to touch the currency. It's hard to believe that WeChat, which replicates the American social media model, will be as smooth as Libra.

This concern also applies to Alipay, which has a considerable market share in Japan.

Facebook used to be quite unsuccessful in the development of payment systems, but their cryptocurrency projects are another matter, and some people have already seen it as a virtual version of WeChat payment and Alipay.

Like WeChat Pay, Libra will have personal and personal remittances, as well as online and in-store payments. Their payment functions are embedded in mainstream social media platforms with billions of customers.

Like WeChat Pay, Libra integrates payment functionality into the entire system through advertising, entertainment, social media and e-commerce. By paying for transactions and financial data, developers can dig more value out of them and extend payment systems to other industries faster.

The main difference between the two is that WeChat payments are based on the renminbi, while Libra plans to develop cross-border payment functions that make it more like Visa and MasterCard (already working with Facebook).

WeChat payment has a payment license, but we have not yet learned whether other Internet companies can obtain the same rights in different countries and regions.

This means that China can take the time to decide whether to start developing its own cryptocurrency. Libra may not benefit in the process, at least not in some way threatening Tencent's overall Asian expansion.

“Libra is unlikely to succeed because the obstacles it faces are unstoppable,” said Meng Liu, an analyst at Forrester in Beijing. He believes that Libra's obstacles include existing electronic payment technologies that he believes are "sufficiently perfect," including Alipay and WeChat payments.

But this analysis sounds less credible.

Assuming that the use of cryptocurrency is like a coupon, then the holder can buy and sell at a preferential price in the national currency, which sounds tempting.

At the same time, China seems to be working on reforming its research on how to regulate nationally recognized cryptocurrencies so that they will respond when Libra is launched.

“Facebook is working hard to do this, and its ambitions are great,” said Will Martino, founder and CEO of Kadena, a company that focuses on public and enterprise distributed blockchain platforms. “I think it’s all. It doesn't sound too viable. They seem to be trying to declare themselves as a sovereign country in their own currency… this is crazy."

Source: Forbes

Author: Kenneth Rapoza

This article has been partially deleted. Translation of Chloe School Li Yongqiang

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