The move to launch the digital Yuan is to discourage cash usage and also facilitate its citizens’ access to financial services. Websites like www.desire-crypto.com offer trading features like artificial intelligence, trading bots, market analysis, live customer and much more for bitcoin traders. In addition, the use of our existing fiat money will be decreased and replaced with a digital currency to encourage citizens to spend through a mobile app. The introduction of this new form of payment has been highly anticipated for the time being.
However, recent news that RMB devaluation will push up the adoption of digital currency has cast uncertainty over the future of such ventures. Interestingly, RMB devaluation has been attributed to the growing demand for Bitcoin. According to an article in “Caijing”, payments made with Yuan through Alipay, China’s version of PayPal, have overtaken US dollar-linked transactions. The surge in the adoption of mobile payments is due to the widening gap between RMB exchange rates and onshore rates.
Blockchain and Digital Yuan, a Deadly combination:
The absence of any official policy regarding digital currency, yet the tremendous interest it has garnered from policymakers and regulators alike over the past few years, leads us to believe that China doesn’t intend to abandon its ambitions of developing its form of CBDC.
Blockchain technology can enhance the security and transparency of transactions, which is one of the most prominent benefits of its usage. Considering China’s ambitious stance on digitization, we might see its government continue pushing this initiative forward. It is also likely that critical stakeholders like financial institutions will begin to adopt blockchain technology into their existing systems.
As China has launched a CBDC, it makes more sense for the nation to continue working on the project rather than take a U-turn and embrace digital currencies like Bitcoin as a payment method. Digital currency will only be adopted by users comfortable with it as a payment method.
Inflation in China is rising:
The rapid rise in the price of bitcoin has caused a wave of speculation as to its cause and whether investors should be worried about where such growth may lead. It has given investors pause whether this is a new asset class or a bubble waiting to burst. The Chinese government has continued to be wary of digital currency due to fears that it could adversely affect the economy. The sharp rise in the value of bitcoin has caused authorities to step up their efforts to halt the spread of such a currency.
However, many people continue to believe that if this is not widely used in daily life and held by an insignificant number of people, it will be difficult for the government to regulate it. Furthermore, authorities reported that China’s central bank chief, Zhou Xiaochuan, had admitted that strictly regulating Bitcoin and other digital currencies risks the economy.
Benefits of using digital Yuan over RMB:
China’s recent RMB devaluation will be good news for the use of digital currency because it provides a credible alternative to the Chinese Yuan. China has been long promoting its idea of digital currency, and this move will ensure that digital currency is used across the country in the future.
While it is still unclear whether the digital currency will replace real money in the future, China has already established a country-wide ‘Digital Currency Research Institute’ to get things moving. China, which is currently the world’s largest bitcoin exchange market, may lead the way in bringing to fruition its efforts to study and advance research into digital currency.
Suppose China will increase interest rates next year by 3%, as expected by many of them. In that case, it may lead to a significant increase in Bitcoin’s popularity across the nation. Still, the complete flash ban on bitcoin in China is going to skyrocket the use of digital Yuan.
While China maintains its stance on digital currency, the currency will likely be used as a viable payment method in the future. It is because Bitcoin transactions are instantaneous and decentralized, which contrasts with RMB, where transactions can take up to a week to process. Digital currency may also help prevent fraud that occurs through centralized payment systems.
The recent news from China regarding its digital currency has cast uncertainty over the future of this initiative and may harm blockchain technology adoption in the nation’s existing systems. However, any attempt made by China to abandon this project would be futile, considering how much the nation has invested in CBDC and blockchain technology research.
China is rolling out pretty well with the digital Yuan:
China has been in the news lately, whether it be on its rampant pollution, the introduction of a state-sponsored digital currency or its latest move toward bitcoin bans. The latter is one measure that many of us have been hoping to see pass by, and the fact that it hasn’t is something that has raised quite some eyebrows. So how do we get around this? Well, quite put Bitcoin.
China’s recent ban on ICOs hints at a new way of thinking about financial innovation. Big commercial banks increasingly rely on blockchain technology for various purposes and will likely begin to roll out digital currency in their products.
