One of the largest crypto exchanges of the world, Binance, has recently commented on China’s alleged plans to create its own digital currency. According to the exchange, the new token will most likely be a two-tiered system that will be used to replace all fiat currency currently in circulation in the largest nation of the world.
Binance claims that the People’s Bank of China, the local central bank, will back its tokens one by one with its national fiat currency.
The system will have two tiers. The first one will be used to connect the central bank to commercial ones while the second tier will connect these banks with the retail users. With this system, the central bank could allow transfers to be made without any need for a bank account.
According to Binance, the two-tier system would be tracked and registered while the second tier transactions would be anonymous (to the eyes of the users, that it). Around 300,000 transactions could be made in a single second, something that is currently not possible using the blockchain, Binance affirmed.
This is a very audacious idea. It would completely replace all notes and coins in circulation in China, basically extinguishing fiat currency as we know it, but not necessarily the money that is held by banks.
The central bank has recently reported that the rumors of the Chinese cryptocurrency-like token were fake, so all information shared by Binance should be treated as pure speculation as this point.