China’s Digital Yuan Could be Gold-backed

It’s becoming apparent that China could back its proposed digital currency with gold, contrary to what many people would expect. Max Keiser, a vocal Bitcoin evangelist, revealed this during an interview with Kitco News.

In several previous episodes, China has reiterated its decision to launch a government-backed digital currency. In August, the People’s Bank of China (PBoC) revealed that the development of the digital version of the yuan had been a work in progress over the years.

Reports also emerged of various banking partnerships including the Agricultural Bank of China, Industrial and Commercial Bank of China, and the Bank of China. Besides, major tech companies such as Tencent and Alibaba also pledged their support for a government-backed digital currency, which further spooked their western competitors.

Digital Yuan to be Backed by Something Real

All the same, the scariest revelation about the entire scheme is that China’s digital money could be backed by something more real—gold. If this happens, it would be a unique organization unlike Facebook’s stablecoin Libra, which is pegged on fiat currencies and the government-controlled US dollar.

During the interview, Keiser who also hosts the Keiser Report on RT emphasized that China’s digital money would be pegged on a tangible and traditional resource—gold.

He said:

“I can tell you that the cryptocurrency China is rolling out will be backed by gold.”

This latest announcement regarding the state-backed digital currency brings two issues to the fore. First, China has to reveal to the world that it owns nearly 20,000 tons of gold and not 2000 tons as earlier reported.

Source: Gold Reserve 2019, Statista

The second issue is the launch of this gold-backed, state-owned digital currency, which Beijing says will “toast” the dollar. Last week, China’s President Xi Jinping applauded blockchain technology, saying China would use it as a ‘core technology for advancement.’ With that statement, the price of Bitcoin (BTC) surged by 42 percent in 24 hours.

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