The Impact of a National Cryptocurrency on China’s Network Structure
https://www.nytimes.com/2019/10/18/technology/china-cryptocurrency-facebook-libra.html
In June, Facebook announced a cryptocurrency plan named Libra. With Libra, money would become digitized and forever change the financial system. This cryptocurrency would also greatly impact the structure of networks across the world. Facebook’s plan, inspired China to develop their own cryptocurrency plan. China’s e-currency plan would allow Chinese authorities to document every transaction that occurs in the nation. As of now the Chinese cryptocurrency plan is still just a project and it is unknown when and if the Chinese government would implement it.
With paper money, it is very hard to keep track of every transaction and extract a network from these transactions. I can imagine that the credit card transaction network is large, complicated, and difficult to document. Each node either represents a buyer(consumer) or seller(business) and an edge connecting nodes represents a transaction(ex: purchase). The credit card network can reveal a specific consumer’s preferences(where they choose to shop and what they buy), which can be extremely helpful for businesses. From my understanding, I do not believe that this network is exploited. For example, companies do not buy this information from credit card companies to influence business models.
A Chinese state-wide cryptocurrency, however, would be different than a credit card network. Chinese authorities would be able to build their own network of the entire country. The currency would effectively force every citizen living in China to become part of the network. Each individual node would have many connections to businesses and people. Currently, authorities claim that they would only use this information for security reasons; for example, the government could use the information to identify a specific node involved with crime(ex: buying guns or drugs). The network could also be used to influence the advertisements a specific node views, and to make business models more efficient. This would provide an abundance of data to the Chinese government.
As Raymond Zhong, the article writer, points out, the Chinese cryptocurrency plan has benefits and drawbacks. The currency has the potential to greatly decrease crime rates, yet at the cost of infringing on the privacy of every citizen.