China is the first country in the world to issue blockchain-powered digital currency to its citizens where 750,000 recipients will be getting access via a lottery system. The digital currency is the digital version of China’s Yuan and citizens will be able to use the digital Yuan in stores and online using a dedicated app according to The Wall Street Journal.
Digital payments are already quite common in China’s local economy where customers could pay for almost everything using apps like WeChat. However, now Chinese citizens will be able to pay using digital Yuans in stores like Starbucks and McDonald’s who are reportedly among some of the stores that are already accepting the digital Yuan.
Having said that, while the digital Yuan is powered by Blockchain, it has stark differences with cryptocurrency such as Bitcoin. Unlike cryptocurrencies, the digital Yuan can be traced to its users and will not offer anonymity. Users will be able to download and store their funds in digital wallets and use QR codes for payments. The digital Yuan will also work on existing app-based payment systems that are being used by companies like WeChat and AliPay.
While China is the first country to deploy a digital currency, many other nations and their central banks are also developing their own form of digital currency. Countries like the US, Sweden and The Bahamas are all developing digital currencies for their citizens to use. China’s digital Yuan will be far easier to use than traditional cryptocurrencies and work similarly to digital payments services that already exist.
China launched the digital Yuan to eliminate the movement of cash in the country which has already seen a massive decline. While physical monies invested in banks for the long term will not be affected, banks will still have to deposit specific amounts with the Public Bank of China to avail the digital Yuan.