I suspect China will rush this through, will force people to start using it and then it'll get hacked (just like many other crypto currency exchanges) and it'll fall out of favour.
China has announced a significant new trial of its digital currency, co-incidentally on the same day influential central banks laid out their plans for a similar effort. China is creating a digital currency for domestic use, to track transactions as part of its ongoing crackdown in corruption, help with economic planning, and …
Monday 12th October 2020 07:46 GMT Anonymous Coward
The difference between this and other cryptos will be, none of it will be anonymous to the government, you hack it, they will just put back what you hacked / transferred. If you were in China, find you and 'disappear' you.
Stealing a government controlled, where every transaction is identifiable, currency would be very hard.
Monday 12th October 2020 10:56 GMT lglethal
Probably not as hard as you think. Bank transactions are fully traceable as well, as are those that go through intermediary services like Western Union and yet money laundering is still relatively prolific.
Once you can exchange the stolen crypto for goods or services or just plain old untraceable hard currency, then there's little that can be done about it. So long as the thieves are quick to move they should get away with it.
What I imagine the Chinese central bank would have to do is reimburse stolen crypto just like visa and Mastercard have to do when someone steals your credit card. It's rare that the credit card thieves get caught and I cant imagine it will be too much different in China once this takes off. (At the start, probably easier to track, because people using the crypto to purchase things will be rare and therefore memorable).
Monday 12th October 2020 11:28 GMT Anonymous Coward
It will be easier as it takes off to stop it, because they wish to replace hard cold cash with this, so its will be the only way to transfer money, all transactions are then traceable.
With your example, the only way to get the money that you have stolen is to buy everything you can as quickly as you can. So no more multi million heists, think it would be easy to trace if you bought a car, house, boat, etc, all linked to the stolen crypto transaction. You could go buy small items, but that's about it. Or you would have to exchange it for foreign currency, which will all be regulated, especially for large transactions. Splitting the transfers through multiple accounts will not help due to the ease of traceability, detection of unusual transfers would be easier.
The way the current fraudulent transfers work is, they get transferred to foreign accounts / mule accounts, which then go withdraw the cash, this cash is now making the transaction further on untraceable.
The money is then either deposited back into other mule accounts or used to purchase other none-traceable goods so it can be moved out of the country.
So now move this over to crypto only. You have lost the anonymity of the cash, so now you need to get hacked user accounts or people willing to be mules with their authorised crypto account within China, otherwise it will be linked directly to you (no doubt at some point China will issue everyone born an account/crypto ID at birth), now your only method is to buy large quantities of untraceable items, within China, that can be resold as your means of anonymising the money.
You could sell the accounts to others, but, they will be wiped out as soon as the theft is detected, so no one will want to buy them for anywhere near the value they have in them and it would have to be sold very quickly.
China also has massive surveillance of their population, making any in person transactions harder, as the transaction destination would be known.
Monday 12th October 2020 12:25 GMT lglethal
I get what your saying, but i think your missing a couple of points -
1) the economic disparity in china - a large proportion of rural Chinese people do not have computers, smart phones, etc. So removing all physical currency would not be possible until everyone is at a level to have the method of making use of the digital currency.
Additionally, a large proportion of rural Chinese do not actually have access to bank accounts, so again how do you make them able to use the digital currency? The divide between rural and urban China is truly staggering at times.
2) There will always be loopholes. The communist party functions by being a well greased machine, If every transaction is traceable, then the greasing would have to stop and those at the top would lose out. Therefore, loopholes will exist to allow the greasing, and where there are loopholes, there are places criminals can exploit.
3) There are plenty of other ways to pass value other than cash - An example I am aware of is that when a Chinese organisation (or people) want to move large quantities of money overseas, they buy a bunch of (very) expensive jewellery, fly overseas with it (with the wife wearing it of course so that it's not obvious that its the equivalent of cash), and then sell it at the destination into local currency. Often the exchange prices of the jewellery is organised in advance, so they can choose their own exchange rate. That's just one way of moving around money outside of controls.
To bring this back into an internal China way, the criminals could buy gold or jewellery with stolen crypto, take it, melt it down into a new form, and then resell it. Provided they werent caught at the point of purchase, the money earned would be almost the same as that stolen, and would again be completely untraceable. So there are certainly ways around it.
Perhaps if the Chinese could wipe out the problems of 1) and 2) above, then they could potentially make a close to fraud free system, but they're not going to be able to flick a switch and there be no more cash to use, and in a dual system (cash and crypto), fraud will be rampant.
And Point 3) above will not go away, even with a full crypto system. No matter how ubiquitous surveillance and controls are, a street kid being paid a 5er (or bought dinner to avoid a trace in a full crypto system) to knock out street cameras near the sales point, would allow underworld figures to do their transactions of stolen crypto without any problems. A fully protected system is impossible, it just becomes a question of how high you want to make the bar for the criminals to jump.
Monday 12th October 2020 12:56 GMT Anonymous Coward
Point 1 is a small problem, either they get with the program, or get left without the ability to use money within China. If that causes a few 10s of millions to die, oh well, less people living below the poverty line. As everyone knows, the Chinese government doesn't care about most of its citizens. They could just drop a few rockets here and there to wipe out some more.
Point 2 , all depends on how far up the corruption goes. If its at the top, or they don't care, doesn't matter if its all logged, its available only to the government, just allows them to know who they can and can not trust / bribe and have evidence (not that they need it) on when they become a problem.
Point 3, yep will not go away, but will be reduced to only unsuspecting people selling items of high value to criminals, as very little, with the exception of people in point 2 will be able to profit from selling anything to the criminals that are stealing the crypto, as they can have a single policy of all stolen crypto will be returned, so it will become a hot potatoe, who will end up with it when its discovered, but then everyone in the transaction flow will be suspect.
But it will not happen over night, will take time, but it is the end game for all governments that want to make use of crypto currency, make it the only currency so its fully traceable and can be used against anyone they see fit.
Monday 12th October 2020 09:56 GMT Empire of the Pussycat
Monday 12th October 2020 10:02 GMT Pascal Monett
"a viable digital fiat currency"
We already have that. It's called a credit card.
I fail to see the interest in having a national funny coin. The single good side that it might have is denting the prolific activity of criminals and incompetents in so-called "exchanges", where the only thing that is really going on is the ticking of the time bomb that is counting away the seconds until data is stolen, coins are lost or somebody makes a getaway with the money.
If that sort of activity can be curbed, then so be it, but don't tell me that my fiat currency I use almost every day is not almost completely virtual.
Hell, there are enough people complaining that the entire banking and financial world is based on a sham. All those who want to reintroduce gold-based monetary values, for starters.
Monday 12th October 2020 10:44 GMT Chris G
Re: "a viable digital fiat currency"
" All those who want to re-introduce gold based monetary values."
That would include a lot of governments who are buying gold or repatriating their gold from other countries, though the UK doesn't have much since Brown sold most of it off at knock down prices for no real gain.
Monday 12th October 2020 11:43 GMT Anonymous Coward
Re: "a viable digital fiat currency"
Yes, money these days really is mostly digital, but the difference is that every transaction isn't directly available to the government, and doesn't need to be, as they can be hidden by banks (if they wanted to). A crypto currency would remove that ability and all transactions between known entities be known to the government in real time and if wanted, authorised only by the government, with the end goal being the only currency being this, so fully controlled.
Monday 12th October 2020 21:32 GMT DS999
Monday 12th October 2020 10:32 GMT I ain't Spartacus
I don't see why so many mentions in the article about Chinese global cryptocoin domination. They don't even allow the Yuan to be freely traded globally, it's pretty unlikely that it's going to be much use to anyone outside China, unless they want to use it in China. At which point if you're using your money in China you'll have to use what the Chinese tell you to anyway.
One of the reasons that so much capital has fled China in the last 10-20 years is that Chinese people don't trust the Chinese government - and Chinese exchange controls have entirely failed to stop that so far - with Chinese companies buying foreign assets to retain profits outside China or doing various invoicing tricks to book smaller profits on their export transactions - and then leave that cash in foreign accounts no longer traceable to the Chinese government.
Obviously the government would like to stop this. But of course the big problem with Xi Xinping's anti-corruption policies is that they're not really about corruption. They're about purging the people from the Party leadership that he doesn't like, or don't support him. But not about stopping corruption. So loopholes will have to be left for those whose support he needs, and those loopholes will always be usable by anyone else.
Monday 12th October 2020 11:14 GMT Pete 2
Monday 12th October 2020 12:26 GMT steamnut
Uk soon too?
When the COVID pandemic became serious the touch payment limit was increased overnight. That new limit will stay even after the crisis is over. The Gobernment and the Banks all want us to progress towards a cashless society. We will be sold on "convenience" but the more sinister side of this is, like China, we will me subjected to continuous data tracking. Add AI to deep data and Orwell's 1984 is the nightmare coming our way....
Certainly businesses that use cash as a tax avoidance system and criminal activities like drug dealing and theft will be unhappy about this as "cash is king" in those activities. But they will find a way around it for sure.
Whatever the liberals in our society say about this, the genie is out of the bottle, and it will now happen much sooner than previous predictions for sure.