Why China’s digital yuan is ‘a dictator’s dream’

China’s President Xi Jinping last month enthusiastically endorsed blockchain technology, generating much excitement in the global crypto community. However, a subsequent crackdown on crypto traders by the People’s Bank of China has made it clear that Beijing’s fondness for such revolutionary technology does not extend to digital assets created by non-state actors. This is particularly true of decentralized cryptos that are designed to be highly resistant to government control such as bitcoin.

Beijing’s keen interest in blockchain technology has sparked concerns about the implications for human rights as the pro-democracy unrest in Hong Kong intensifies and the persecution of the country’s Uighur Muslim minority in Xinjiang attracts international opprobrium.

In a recent interview on BlockTV News, Alex Gladstein, chief strategy officer at the Human Rights Foundation [HRF], shared his views on China’s approach to the new technology. He contrasted the permissionless, censorship-resistant technology of bitcoin with the ultra hi-tech system of surveillance and control that Xi aims to impose on the people of China.

The goal of the Communist Party of China is to control the lives of citizens at a “micro-level,” Gladstein said. Bitcoin, on the other hand, is the antithesis of Xi’s authoritarian vision, being specifically designed to empower individuals by allowing them to store their wealth beyond the reach of state control and freely transfer it without the consent of the government or a financial institution.

Gladstein said Beijing has rejected bitcoin because it would not serve as a government “micro-surveillance” tool.

However, Gladstein believes the digital yuan, which is now under development and is expected to be released within months, is specifically designed to serve Xi’s authoritarian agenda. Beijing has pitched the digital yuan to the people as a more secure and stable alternative. However, Gladstein warned that by giving the government access to everyone’s wallet, the digital yuan will become a highly effective state surveillance tool.

China will no longer need to obtain customer information from payment companies to monitor citizens’ transactions. It will also achieve the goal of eliminating cash. All financial activity, said Gladstein, will become easily trackable.

Also read: Most Chinese blockchain firms keen on crypto

“The system will be built so that the censors or authorities within the banking system… would have total control and knowledge of every single transaction aided by artificial intelligence,” he said.

“Their goal is to literally get rid of all paper and middle money and replace it with something that’s completely trackable. And that is certainly the dream of any dictator.”