Chinesehas issued its official digital version of the Yuan currency which is different from Bitcoin and conventional cash.
This digital currency is similar to cryptocurrency by combining several elements of the blockchain technology used by Bitcoin. Because, every transaction will be recorded and can be tracked in a digital book.
So, the Chinese government can find out how, when, and where people spend their money. In the future, this digital Yuan will replace most of the cash that is already circulating in the community.
Unlike Bitcoin
Although it is said to be similar to Bitcoin which uses the blockchain system, there is a slight difference between digital Yuan and bitcoin. Although both of these money have no physical form.
Bitcoin is decentralized, all transactions are verified by all machines involved in this ecosystem. Bitcoin ownership is not owned and controlled by a single entity, and is not distributed by the central bank.
Meanwhile, digital yuan is owned by the Chinese government through the Central Bank of China. So that the government has the responsibility to manage the country’s monetary supply.
Unlike cash
This digital currency can be used after downloading the Renminbi application on the cellphone. Digital Yuan transactions are now being used in supermarkets, pharmacies, and several e-commerce businesses in five cities in the Bamboo Curtain country.
How to use digital yuan is not much different from using digital payment services in China today such as Alipay or WeChat Pay. Users just need to scan the QR code to make payments. In Indonesia, the method is similar to Ovo or Gopay.
However, to use AliPay or WeChatPay, users must first have a bank account. From this account the funds will be withdrawn. This does not make users leave the conventional banking system.
Through digital yuan, users don’t have to have a bank account. This digital currency goes directly to the user’s electronic wallet.
In contrast to cash and conventional banking systems. This currency was created digitally. It is still in cash, but cannot be felt physically. Like you are playing a virtual game and have coins that can be spent in the game.
The advantage of digital money is because users don’t need to have a bank account to be able to transact online. Meanwhile, for the government, they can monitor transactions that occur in their country more clearly and real-time, as reported by CGTN.
Launching CNN, Deputy Governor of the Central Bank of China Fan Yifei said the development of this digital currency aims to reduce the intensity of online payment services that are widely circulating in the country.
For example, ANT Group’s Alipay, and Tencent’s WeChat Pay, which have been widely used as a digital transaction method in China.
“It fulfills Beijing’s desire to reduce the growing influence that private technology companies and their digital payment services have on the country’s financial system,” he said.
The trial
China has been preparing for a digital Yuan trial for one year. The initial testing of China’s national digital currency has been carried out since the beginning of this year.
If the test is successful, then China will become the strongest economy in the world offering a national digital currency. This digital yuan will beat the European Central Bank’s digital version of the Euro.
China hopes that this digital Yuan will become the currency of the future. With digital currency, it will make the buying and selling process easier and safer.
Launching CNBC, the government in Shenzhen has also held a lottery to award a total of 10 million yuan (about USD 1.5 million) in digital currency.
Nearly two million people applied and 50 thousand of them won. This digital money can be spent in more than three thousand shops in the Shenzhen area.
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