Tencent, the Chinese internet firm valued at $461 billion is creating a team to look into digital currencies according to local news reports. The company is behind the wildly successful WeChat app as well as many other internet properties.
The media report noted that by forming the digital currency research team, it would align the company more closely with the goals of the Chinese government, which recently announced plans to scale up blockchain research. The company is part of a core team of major firms that will take part in a planned rollout of a national digital currency. WeChat and AliPay account for about half of China’s mobile payment industry. This puts the figure at around 580 million people, more than double the size of the US adult population.
Tencent is one of the major firms participating in the rollout of China’s national digital currency. One crypto expert noted that this development was good for WeChat in the near term. However, the launch of a national digital currency in China could prove to be a major risk to the AliPay and WeChat business models. While the planned digital currency will offer some benefits for the e-Commerce sector, both Tencent and Alibaba would be making a huge mistake if they do not view it as a competitor. It is also worth noting that both Alibaba and Tencent are making major expansion moves into about 150 nations that are part of the One Belt One Road initiative.
Replacing the Dollar
One reason why China is launching a national digital currency is to replace the dollar as the global reserve currency. However, Tencent does not appear to have such lofty ambitions. Currently, the company seems intent on creating solutions that will supplement the national blockchain push by China.
For instance, the Belt and Road initiative by China is expected to use blockchain technology as one of the core technologies for data storage and processing. Tencent would play a crucial role in helping China to implement the blockchain efficiently. Various major firms in East Asia are currently recruiting blockchain experts.