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China has become the first country to launch a digital currency. China’s Central Bank, the People’s Bank of China, announced the launch of Digital Currency earlier this February. The currency is named ‘Digital Yuan” or “e-CNY.” However, the new digital currency is not a cryptocurrency, and it will not use blockchain technology like Bitcoin. Instead, it will be more like online credits in some video games. While China has the Digital Yuan, Bitcoin traders from other parts of the globe are using btcrevolution for successful trading.
According to a government researcher who requested anonymity, the Digital Yuan will use a “two-tier” system that allows authorities to trace transactions back to individuals if necessary. China has been cautious about virtual currencies like Bitcoin as their wild fluctuations make them risky investments. So let’s start with a few intriguing details about Chain’s digital currencies, e-CNY (Digital Yuan).
Digital Yuan And Its Existence
China’s central bank has launched its own digital currency, Digital Yuan, with support from the Chinese government. The goal is to issue a “stable and secure” currency that will be used alongside traditional money in transactions and support China’s push to develop its payment system infrastructure, the People’s Bank of China says in a statement.
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This currency is designed with a motive to replicate cryptocurrencies like Bitcoin, except for their decentralized nature. This Digital Yuan is regulated by the central authority, PBOC, and the government; there will be no anonymity or privacy in making payments.
Digital Yuan allows users to make peer-to-peer transfers in small amounts. However, you cannot transfer these currencies across borders, and they cannot be traded peer-to-peer using blockchain technology, unlike cryptocurrencies like Bitcoin. Therefore, as of now, Digital Yuan is only accessible to the citizens and people of China.
How did Digital Yuan Start?
The Chinese central bank is not the only one that wants to create a digital currency. Since black market users and scammers have used cryptocurrencies like Bitcoin, governments around the globe are looking at new ways to regulate them. China aims to do this through a centralized digital currency that can track transactions and limit the use of illegal money transfers. The Digital Yuan will provide the following benefits to China:
- To offer a private, secure and transparent electronic method for payments.
- To allow for more convenient methods for payment of utility bills and telecommunication charges.
- Improving the current financial infrastructure.
China has built a specialized system of DCEP (Digital Currency Electronic Payment) for the past five years; the government created this system to manage a smooth and streamlined transaction flow of the Digital Yuan throughout China. Currently, the government plans to convert a fraction of holdings by banks into Digital Yuan.
Few Key Differences between Digital Yuan and Bitcoin
While both the currencies are electronic and virtual, there is a significant difference in their setup. Bitcoin has a decentralized setup, whereas the Chinese government regulates Digital Yuan. Bitcoin allows users to be anonymous and make peer-to-peer transactions, whereas Digital Yuan does not. However, there are no regulations for peer-to-peer transactions of Bitcoin as well. Digital Yuan has a two-tier structure compared to one tier of Bitcoin, allowing it to monitor transactions and track them back if necessary.
This Chinese digital coin will be available only in China, whereas people around the globe can use Bitcoin. In addition, Digital Yuan will be 100% centralized and digital currency instead of Bitcoin, a decentralized digital currency. According to a report, Digital Yuan will utilize Blockchain technology to transmit the payment data across the network to the users.
How To Get Digital Yuan?
The digital currency is not available yet, and only after a couple of months will it be launched by per Chinese government officially. However, banks are already testing the new e-CNY system, which citizens will use to facilitate many transactions. Additionally, the government has made it clear that Digital Yuan will be accessible only to the citizens of China. It means there will be no participation or interference from anyone outside China.
To sum up, Digital Yuan is a centralized currency that citizens will use in China to facilitate transactions and increase the productivity of the government. Digital Yuan is the first of its kind and seems similar to Bitcoin, except it cannot be traded peer-to-peer or bought on the exchange. The government’s plan to set up an e-CNY system with Blockchain technology shows that they never want digital currencies to become decentralized like Bitcoin.
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