Recently, the Industrial and Commercial Bank of China (ICBC), China's largest state-owned bank, released a report that comprehensively assessed the trend of digital currencies, which highly praised cryptocurrencies such as Bitcoin and Ethereum, and even compared them with traditional commodities such as gold and oil. This report has undoubtedly attracted widespread attention in the industry and is considered an important signal that Chinese regulators have become more friendly to cryptocurrencies.
Comparing Bitcoin to "Digital Gold"
In the report, ICBC first conducted an in-depth analysis of Bitcoin. They believe that Bitcoin has successfully maintained scarcity similar to gold through its unique mathematical consensus mechanism. This first and most successful cryptocurrency has solved key issues such as divisibility, authenticity verification and portability.
At the same time, Bitcoin also has advantages such as transaction convenience and globalization, making it increasingly a new generation of "digital gold". As historian Yuval Noah Harari pointed out, human imagination is the key driving force behind the exponential growth of digital currency types and applications.
Comparing Ethereum to "digital oil"
In addition to Bitcoin, ICBC also highly praised Ethereum in the report. They believe that Ethereum, as the second largest cryptocurrency, can be regarded as "digital oil". Ethereum's blockchain provides infrastructure for the innovation and development of decentralized applications (dApps), just as oil is the foundation of industrial civilization. Ethereum is becoming a commodity and fuel for the digital world, just as oil played a role in the industrial age.
This comparison is not without reason. As the foundation of smart contracts and distributed applications, Ethereum is becoming a key energy source for the development of the digital economy. As the report points out, Ethereum is increasingly becoming a bridge between the traditional financial system and the cryptocurrency market.
The importance of stablecoins
In addition to the analysis of Bitcoin and Ethereum, the report also mentions the development of stablecoins. ICBC believes that these innovative digital currencies are meeting the unique needs of the digital economy and becoming a key bridge connecting traditional finance and the cryptocurrency market.
As a type of cryptocurrency, stablecoins are anchored in fiat currencies or other assets, which can avoid the high volatility of cryptocurrencies and provide a more stable payment tool for the digital economy. These stablecoins are promoting the development of the entire digital currency ecosystem.
CBDC and mainstreaming
The report also mentioned that as central banks around the world accelerate the launch of their own central bank digital currencies (CBDCs), digital currencies are transforming into mainstream financial assets at an unprecedented speed. Taking China's digital RMB as an example, its pilot operation in multiple cities has made positive progress, which also shows the important position of CBDCs in the future financial system.
In addition, mainstream cryptocurrencies such as Bitcoin and Ethereum continue to attract market attention. According to the latest data, the balances of these cryptocurrencies on exchanges have dropped to a nearly four-year low, indicating that investors tend to transfer them from exchanges to cold wallets for long-term holding. This trend shows that digital currencies are transforming from speculative tools to more mature financial assets. The report of ICBC also reflects this transformation, and the bank believes that digital currencies are becoming an indispensable force for financial innovation.
China Sends Crypto-Friendly Signals
It is worth noting that China’s state-owned banks’ positive attitude towards digital currencies is also seen as a signal that Chinese regulators are relaxing their attitude towards cryptocurrencies.
In 2021, China introduced the most stringent cryptocurrency ban in history, prohibiting financial institutions from providing any services for cryptocurrency transactions. This policy has led to a large number of crypto companies and mining farms leaving the Chinese market.
But in the past year, the attitude of Chinese regulators has softened. In early 2022, an official from the State Administration of Foreign Exchange of China said that restrictions on virtual currency transactions may be relaxed in the future. The report released by ICBC this time is also considered a positive signal released by China in the field of encryption.
Summarize
In general, ICBC highly praised digital currency assets such as Bitcoin and Ethereum in this report, and compared them with traditional commodities such as gold and oil. This not only fully demonstrates that the status and influence of digital currency in the financial field are constantly improving, but also indicates that digital currency will play a more important role in the future financial system.
At the same time, this report is also seen as an important signal that Chinese regulators have become more friendly to cryptocurrencies, which has attracted widespread attention in the industry. With the continuous improvement of supervision and the active embrace of traditional financial institutions, digital currencies are moving from the margins to the mainstream, pointing out the direction of digital currency development for investors and industry insiders.
