China launches digital yuan – but not to be confused with cryptocurrency

TECHNOLOGY

Some 100,000 Chinese citizens received some digital yuan to participate in testing a new payment system. The Chinese government openly says that the digital yuan will eventually replace physical bills and banknotes. Events are not rushing there, but they do not hide the fact that they intend to lay the standards for the future financial system.

The fundamental difference between the digital yuan and numerous cryptocurrencies is that it is centralized, non-anonymous and officially recognized by the state as a means of payment. It cannot be mined, all transactions immediately become known to the Central Bank of China, the amount of digital yuan and the dynamics of their circulation are completely controlled by the authorities. Moreover, as the new currency is introduced, the Chinese will proportionally destroy physical yuan so as not to multiply the amount of money.

To use digital yuan, you will need to download the official application to your smartphone or get a special card. The authors of the initiative emphasize that the use of this payment instrument does not require an Internet connection, so it will be relevant even in a remote village. In the future, China intends to make digital yuan an international currency and extend their effect to other countries.

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