A long time ago, when people bought goods with gold and silver coins, China invented paper currency. Now in the age of technology, China is becoming the first major economy to create its own digital currency.
The blockchain-based digital currency will be controlled and issued by China’s central bank, and the country has been working on the project since 2014. Cashless payments with cell phones are already prominent in China. A digital yuan would speed the process up, making transactions in China faster and cheaper. Additionally, the digital yuan could eliminate all the issues that come with using cash.
But unlike Bitcoin and other cryptocurrencies, the digital yuan won’t have anonymity for its users, which is one of crypto’s most prominent features. The virtual currency will allow for more centralized control and monitoring — when someone makes a purchase using the digital yuan, China will know precisely where and what they purchased.
To promote acceptance and introduce the country to the new currency, a lottery system selected 750,000 people to spend their digital yuan using an app. Currently, a method is being worked on that will allow users to use the app without being connected to the internet.
China isn’t the first country to introduce a digital currency, but they are the first major economy. The first country to introduce a digital currency was the Bahamas Central Bank last year.
What are your thoughts on the digital yuan? Would you be interested in a digital currency controlled by your country’s central bank?
I am not a financial advisor and my comments should never be taken as financial advice. Investments come with risk, so always do your research and analysis beforehand.