As interest in Bitcoin has grown in recent months, so has interest in China’s digital yuan.
The digital yuan is making headway
Bitcoin has been booming for the past six months. The world’s leading digital currency rose from $ 10,000 in early October to about $ 59,000 at press time. That is an increase of almost five times the original price. However, interest in BTC is also generating interest in other forms of crypto such as the digital yuan. China has effectively banned Bitcoin and is trying to introduce the digital yuan to replace some of the cash and alternative currencies floating around the country.
In a recent interview, Wang Xin, director of the People’s Bank of China Research Bureau (PBOC), told reporters:
On the one hand, this has to do with the fact that more and more central banks around the world are involved in the development of domestic digital currencies. On the other hand [interest] can also be related to the sharp rise in the price of Bitcoin.
The digital yuan initially opened up to mixed thoughts in the sense that as a centralized currency – in other words, a form of money issued by a bank – it contradicts the very same notions that made Bitcoin and some other cryptocurrencies so popular. Bitcoin is a decentralized asset, meaning it is not controlled by a single entity. Those who own Bitcoin are responsible. You can decide how it is used, what it is spent for, and who should have access to certain information.
The goal of Bitcoin and other decentralized forms of currency was to give people back financial independence, but a centralized currency counteracts that, and the fact that it’s digitized seems like a big slap in the face for many analysts.
To add insult to injury, many countries seem intrigued by the idea of issuing digital versions of their national currencies. Regions like Japan, Sweden, Switzerland and the UK are currently exploring the possibilities of issuing centralized digital currencies through their banks, which could jeopardize the status of Bitcoin and other popular forms of crypto.
This contradicts the idea of the digital currency
Another problem? Bitcoin is based on blockchain technology, while to this day it is not clear where the digital yuan comes from. This raises serious questions about user privacy and whether the asset will be used to spy on their purchases.
At this time, the digital yuan is still in a development stage, which means it has not yet been released on a national basis. However, the asset has completed several successful pilot programs giving selected users time to test the currency and use it for various purchases. More of these pilots are currently planned for the coming future.
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