People’s Bank of China (PBoC) is officially launching a digital currency research institute on Jan. 29, one day after the celebration of the Chinese Lunar New Year.
In an interview with a national newspaper China Securities Journal earlier this week, PBoC department of technology director Li Wei revealed the plans of PBoC to actively examine and explore Blockchain technology.
Specifically, Wei stated that the central bank of China is interested in the ability of Blockchain technology to settle real-time transactions in a secure, cheap and efficient ecosystem of peer-to-peer users.
To test and experiment with Blockchain technology in real-life scenarios, Wei announced that the PBoC is looking to form a research institute focused on researching Blockchain and digital currencies to ensure the potential of Blockchain technology is fully maximized within the Chinese financial scene.
“For Blockchain technology, financial institutions should combine their findings and technical research to focus on real-time transaction settlement, resource utilization, sensitive information protection and strengthen risk prevention of Blockchain technology, to better serve the financial industry and technological innovation.”
Focusing on risks
Wei sees many risks involved in implementing Blockchain as core infrastructure of financial operations primarily because he believes Blockchain technology isn’t mature as of yet.
Peter Smith, CEO of the world’s most popular Bitcoin wallet platform Blockchain, brought up a similar point to Wei in December of 2016 when he stated that Blockchain technology is still in its infancy. He believes Blockchain technology has the potential to overhaul the current financial system but only if it goes through this phase of unsuccessful projects and platforms.
“The Blockchain industry is moving into the Trough of Disillusionment, marked by waning interest as experiments and implementations fail to deliver,” Smith stated. “During this time, many will fail and exit the market, while those that survive will continue to enjoy market success, secure investment dollars and march forward along a path to widespread market adoption.”
For Blockchain technology to undergo this phase and commercialize itself for the general consumer base of financial technology, it is important for companies and financial institutions to urgently address risks involved. Like Wei says, it is crucial for Blockchain technology to become standardized and solve both regulatory and security issues before being implemented into existing infrastructure.
The Chinese government already has a Blockchain consortium in a place called ChinaLedger. PBoC is highly likely to cooperate with ChinaLedger and other major players in the financial industry to sustain research and development being done in its digital currency research institute.