Zombie coins, vampire coins (the ones that drain your wealth away), demonic possession by an irate Shiba spirit, your portfolio transforming every full moon into a creature that devours you, while these are all nightmare scenarios for every crypto investor, the subject of this post is unfortunately deadly serious. The true nightmare is the dark reality descending on the world in the form of a new currency. That currency is the Chinese digital Yuan, the central bank digital currency (CBDC) of the Chinese Communist Party (CCP). It is important to note that the state is the party, and the party is the state. The CCP does not share power, it is paranoid and repressive, The Party does everything to maintain and expand its power. This now includes creating a new electronic form of the Yuan. There has been much speculation around the nature of the eYuan but with the release of their "whitepaper" a last week some things are coming into clearer focus.
This "whitepaper" is a guideline and rationalization for the introduction of the eYuan, and light on technical specifications. In the paper the People's Bank of China (PBOC) states their opinion of cryptocurrencies general saying,
“Adopting blockchain and encryption technology, cryptocurrencies such as Bitcoin are claimed to be decentralized and entirely anonymous. However, given their lack of intrinsic value, acute price fluctuations, low trading efficiencies and huge energy consumption, they can hardly serve as currencies used in daily economic activities. In addition, cryptocurrencies are mostly speculative instruments, and therefore pose potential risks to financial security and social stability. Moreover, they have been employed as payment instruments for money-laundering and other illegal economic activities.”
This statement is no surprise to any crypto veteran considering the voluminous levels of FUD originating from the CCP. However, the statement is misleading in the sense that crypto lacks "intrinsic value" this just demonstrates that the PBOC is attempting to cast the entire crypto market in a singular light. Granted the CCP has always been lacking when it comes to nuance and prefers a Manichean worldview. Just a fleeting cursory knowledge of the Cryptoverse illuminates the inaccuracies of this statement. The words of The Party are meaningless noises, their actions, however, speak volumes.
The most important aspect of the eYuan revealed in this document is the programmability of the CBDC. Up until now this was a topic of speculation but has now been confirmed.
“E-CNY obtains programmability from deploying smart contracts that don’t impair its monetary functions. Under the premise of security and compliance, this feature enables self-executing payments according to predefined conditions or terms agreed between two sides, so as to facilitate business model innovation.”
The PBOC claim of business innovation may have some truth but like all swords there are two edges and the other may cut into whatever privacy the people of China have left. The CCP has already created the world's most surveilled totalitarian state in history, it'd even make the most ardent Stasi agent blush. The PBOC's claim in the paper that small transactions have a level of privacy these statements are full of caveats. If the CCP wants to do something they will, there is no rule of law in China, there is no appeal to an independent judiciary or any protection for the individual. While they may not actively monitor all small transactions, they will certainly take deep dive into your eYuan wallet if you become a person of interest. Right now, it appears that the CCP is mostly concerned with the tech sector and the payments systems. For years, the sector went unregulated and that hands off approach has ended. The CCP saw how much data, and potential power, companies like Alipay, and WeChat pay were accumulating and became concerned. They want to be the ultimate masters of all data in the nation.
It is ironic how the PBOC claims that crypto currencies have no intrinsic value yet directly lift the concept of programmability from Bitcoin and Ethereum. Small beginnings can have enormous endings and with the eYuan the future is dark. In China they already have a social credit system that can severely restrict individual freedoms if you are non-compliant with the state. The eYuan can give The Party another vector of control into this social credit system by controlling what people can and cannot purchase. Speculating even further could the programmability even block the eYuan from being used to purchase "prohibited" items? For instance, let's say you are a Chinese citizen visiting Disneyworld and you want to buy a Winnie-the-Pooh doll, since Winnie is banned in China could the eYuan be "programmed" to decline these types of purchases? Beyond the humorous this has serious ramifications, what if they do not ban certain items but allow you to purchase them and later entrap you with owning a copy of 1984 or the Bible. Controlling the Chinese people is paramount to the party and getting "dirt " on as many citizens as possible to threaten them when it becomes necessary is definitely not something beyond the CCP.
If any of that speculation sounds outlandish then you have to look no further than the systems already in place to control the internet and the troll farms The Party operates to disseminate their nationalistic propaganda. The eYuan can easily be folded into their existing censorship architecture like baking the world’s worst soufflé. The CCP is an enemy of individual rights, human decency, liberty, and privacy, making the eYuan the antithesis of Bitcoin's founding principles. The CCP's digital money is not a competitor to Bitcoin and other crypto currencies but their nemesis.
As much as The Party claims it is inseparable from the Chinese people this is just more of their propaganda, China existed before the formation of the communist party and will continue after The Party is decomposing in the dumpster of history. Their vision of a one-party totalitarian dictatorship as some benevolent patriarchal figure with some paternalistic tendencies toward their people is a fiction. These are old men gripping onto power as tightly as possible, repression, and surveillance are just tools in their kit for maintain the dominance of The Party. Now the currency of the nation will be weaponized as another lever of this unrelenting quest for dominance. Dark stuff indeed, but so is the night just before the dawn.