How The Digital Yuan Could Be Another Game Changer Extending China's Global Economic Domination
A New World of National Cryptocurrencies
Though many
national cryptocurrencies prefer to be known as CBDCs (Central Bank Digital
Currencies), mainly because they are controlled by the central bank and
government, they still have the main characteristics of blockchain
cryptocurrencies, which are anonymity and transparency.
Some countries
have taken a giant step in launching their own national cryptocurrencies, such
as Dubai’s EmCash, Senegal’s eCFA, and Venezuela’s Petro. Other countries like
Japan, Sweden, and Russia plan to launch their own national cryptocurrencies soon
(though some of these countries show little enthusiasm while some may have even
pulled out).
But of the
world’s major economies, China appears to be taking the lead in the creation of
national digital currencies, and the highly-anticipated Digital Yuan has been
on the mouth of every Chinese, as well as in every crypto community on the web.
Let’s find out
in this article what Digital Yuan is doing, and how the currency will
revolutionize national digital currencies and transactions in China, and then
all over the world.
What China’s Digital Yuan Is
Doing
China’s
Digital Yuan is really becoming famous across China and all over the world,
though it’s still in its testing phase and will likely be launched mid-2021.
Regularly, the China’s central bank and other banks involved in the
administration of Digital Yuan publish reports about the progress of the
national digital currency.
Some of the
recent and important progress reports are briefly discussed in the paragraphs
below:
1. Digital Yuan May Replace Cash
if Four Conditions Are Met
Li Lihui, who
is Bank of China’s former president, has speculated that Digital Yuan may replace
the use of cash in China if four conditions are met, including
ü
Efficiency of use of the coin
ü
Low transaction costs
ü
High economic scalability with commercial value,
and
ü
Massive adoption
2. Digital Yuan Will Not
Cause Inflation
According to
economic experts, inflation is caused when too much of a particular currency is
in circulation, such that it loses its inherent value and causes a hike in the
prices of goods and services.
Although most
cryptocurrencies are adapted to handling inflation since it becomes harder to
mine more coins by the day, Digital Yuan has a tougher anti-inflation model.
The Chinese banks in charge of the digital currency have declared that they
will roll out Digital Yuan in small amounts for public use in the short term.
3. Digital Yuan Transacts
without Internet or Contact
Being able to
transact off the internet is an added advantage for Digital Yuan. This kind of
model will enable seamless digital transactions unlike other internet-based
cryptocurrencies that may be interrupted when there’s an internet issue.
Moreover,
Digital Yuan doesn’t need direct contact to make or receive payments. This may
be an attribute that is common to all cryptocurrencies, but the
highly-anticipated digital Yuan isn’t left behind.
4. Digital Yuan Mobile App is
Currently Being Tested in Four Chinese Cities
The Digital
Yuan mobile app is currently being tested in four cities including Suzhou,
where it is used to subsidize payment for local employees’ transportation. It
is also tested in Xiong’An, an economic area where it is tested for
transactions involving food and retail.
Final Words: Digital Yuan Is
the Game Changer for National Cryptocurrencies
China has been
working very hard to be the first major economy to launch its own national
digital currency, and the model looks feasible so far. Moreover, Digital Yuan
may become relevant on the long run, internationally, and it is doubtless if
other national cryptocurrencies will ever catch up.
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