Tag Archives: COVID19

China’s Pursuit of Digital Yuan Unswerving in Wake of COVID-19 Global Pandemic says Central Bank

China's Pursuit of Digital Yuan "Unswerving" in Wake of COVID-19 Global Pandemic, says Central Bank

China’s central bank has further galvanized its public commitment to creating the first central bank digital currency (CBDC), a digital version of the Yuan, at an annual meeting hosted last Friday by the People’s Bank of China (PBoC) vice-governor Yifei Fan.

A summary notice of the 2020 National Currency Gold Silver and Security Work Video and Telephone Conference released on April 4 outlined the People’s Bank of China priorities for the year ahead which reaffirmed its commitment to the digital Yuan which is also being called a Digital Currency Electronic Payment (DCEP).

According to the summary, the PBoC’s continuous improvements to cash systems and securities will be guided by Chinese Leader Xi Jinping’s new era socialism with Chinese characteristics. Per the release, “One is to strengthen the top-level design, unswervingly advance the research and development of legal digital currency, systematically promote the reform of cash issuance and return systems, and accelerate the promotion of banknote processing business, issuance of bank guards and issuance funds.”

This marks the third time that the DCEP has been raised at the annual meeting and the intensity of the language used seems to signal a strengthened commitment by the PBoC.

The DCEP Top-Level Design

So how will China create its digital currency? First of all, we know that the digital currency will not be running on a blockchain. After a review of the 50 patent applications submitted by the PBoC, it will be powered by a two-tier operating system and will not be fully decentralized.

According to Binance, the central bank DCEP will be backed 1:1 by Renminbi fiat, following a two-tiered structured system involving the central bank, commercial banks, and the retail market. The first layer consists of the PBoC issuing and redeeming China’s digital Yuan via commercial banks. The second layer is responsible for connecting the commercial banks with the retail market. The plan is to replace notes and coins in circulation, known as the M0 supply.

China’s central bank mentioned that their digital currency would be issued to seven institutions in the coming months, but that was last September.

Paul Schulte, who worked as the global head of financial strategy for China Construction Bank up until 2012 says that the largest and second-largest banks of the world, Industrial and Commercial Bank of China and Bank of China as well as the Agricultural Bank of China, along with Alibaba, Tencent and Union Pay will be receiving the digital currency first.

COVID Incentives

Although China’s digital Yuan project has been in development for yearsgiven the effect of the coronavirus outbreak and its spreadability through surface contact, there may be added motivation to move beyond physical bank notes. The PBoC previously announced that it would disinfect cash for up to two weeks before absorbing it into their vaults and put around 600 billion of new yuan into circulation on Feb. 15 

Researchers at the Bank for International Settlements (BIS) recently released its newest quarterly report on the changes in the payment industry, including the market impact of the recent coronavirus outbreak. 

The report highlighted the ways the COVID-19 could be the catalyst to spark mainstream digital payments. Per the report, “The most transformative option for improving payments is a peer-to-peer arrangement that links payers and payees directly and minimizes the number of intermediaries. Many peer-to-peer arrangements use distributed ledger technology (DLT),”


Bitcoin and Libra have also caught the institution’s attention, while the BIS acknowledged that central banks are increasingly exploring the “desirability and feasibility of establishing their own peer-to-peer systems through digital currencies." 

Heiko Closhen, Entrepreneur

ConsenSys Reveals How the Ethereum Network Weathered the COVID-19 Pandemic Market’s Flash Crash on Black Thursday

ConsenSys Reveals How the Ethereum Network Weathered the COVID-19 Pandemic Market's Flash Crash on Black Thursday

The world of traditional finance has been in a state of recovery since the shock market crashes that began on March 12 due to the economic disruption of the coronavirus pandemic which was further exacerbated by Saudi Arabia’s sudden attempt to seize a controlling share of the world’s oil market.

While much debate has raged about the state and action of crypto’s main player Bitcoin, new insights generated using ConsenSys’ analytics suite, Alethio have revealed how the Ethereum network has endured the evaporation of liquidity in the global markets.

In a blog released on April 6, ConsenSys reported that the crash that occurred on March 12, dubbed “Black Thursday”, was proof that crypto and DeFi markets are still correlated to traditional markets. The report further revealed how the Ethereum network performed as well as interesting insights about the resilience of the decentralised exchanges (DEX). 

Ethereum Maintained Hash Power 

In blockchain networks, maintaining a high hash rate is critical in sustaining security and staving off a 51% attack. If an entity gains control of more than 51% of the total computing (hashing) power within a blockchain network. The protocol of a blockchain system validates the record with the longest transactional history. If the attacker has more than 50% of the hash power, they will have the longest transactional history.

Hash rate is indicative of the speed at which miners operate, specifically with Ethereum the number of hashes guessed per second for solving the nonce of a block of transactions. 

According to ConsenSys, during the most volatile market day, March 12, “The hashrate on the Ethereum mainnet remained stable at ~170TH/s.” The enterprise ethereum firm also reports that “During the week of March 12-18, the daily average hashing power was ~165TH/s, nearly identical to March’s daily average level of ~167TH/s.”

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What this really reveals is that on the darkest day for the market where the ether price fell over 40%, Ethereum’s miners did not abandon the network but maintained the hashrate throughout the price volatility which allowed the network to remain secure and speaks volumes to their belief in the network.

DEX Not Halted Like Traditional Markets

ConsenSys also highlighted that during the market drop on March 12, the Decentralized Exchanges (DEX) for Decentralized Finance (DEFI) protocols handled an “astronomical amount of trading volume without any major issues, attacks, or outages.” The DEX has appeared to pass this flash test with flying colours easily traversing the obstacles that halted traditional markets.

According to data from Alethio, the panic was intense but short lived. Per the report, “$70m USD was traded on March 12 alone, with Uniswap handling $42 million USDnearly 6x the daily average trading volume in March. By March 17, daily volumes of ETH and the number of unique traders across DEXs returned to pre-crash levels.” By comparison, US stock exchanges were forced to halt trading four times in mid-March via the circuit breakers which are established safeguards to prevent flash crashes driven by high-frequency trading.

Robinhood, the commission-free trading platform also experienced technical outages at the beginning of March, ConsenSys notes but believed the outages were unrelated to the market circuit breakers, but rather due to stress on Robinhood’s infrastructure.

Heiko Closhen, Entrepreneur