Which is the world’s first digital currency?
Digital currency is projected to transform the functioning of banks and economies of several countries. While many central banks have initiated the process of issuing digital currencies, only a few have been able to perform trial runs. But China has gone way far beyond and is all set to be the first country to issue an official digital currency. The electronic Chinese yuan is undergoing a huge trial run in cities like Shenzhen, Shanghai, and Beijing. There are no other huge economies across the globe that have gone this far along for pushing their digital currency.
Launch of digital currency in China:
- App-based payments were highly used in almost every Chinese business; hence traders could easily adapt to the new offer by the governments. Even local economies were filled with users who would transact using apps such as WeChat. This helped the circulation of digital Yuan even stores such as McDonald’s and Starbucks who are readily accepting them.
- Digital Yuan is aided by Blockchain and has major differences from cryptocurrencies. Different from cryptocurrencies, this digital yuan can be linked to its specific users and will not have anonymous nature. Users can download and place their funds with the help of digital wallets and employ QR codes for doing the payments. Digital Yuan will also communicate and sync with the already present app-dependent payment systems that are employed by companies such as Alipay and WeChat.
- China is the first country to launch a digital currency with huge test runs. Even a few other countries are on the verge of deploying their digital currency. It involves countries like Sweden, the US, and the Bahamas that are developing digital currencies to be shortly circulated for a trial run. But the users are claiming that China’s digital Yuan is the easiest among them and works according to the digital payment services that are already present. Chinese citizens are allowed to apply for digital currency through their respective banks.
- China deployed the digital Yuan to slowly negate the movement of cash which is already being reduced across the nation. This will not impact the physical monies financed in various banks, but the banks should deposit certain amounts with the Public Bank of China to get the digital Yuan. It is administered by the central bank of China that is issuing digital money which is expected to offer new tools to Chinese governments to administer the vast economy. It has been on the trial run majorly with ride-sharing and food delivery apps across major cities like Shenzhen, Shanghai, and Beijing.
Benefits to China:
Payments done employing digital payments offer more benefits than doing them on digital platforms such as WeChat and Alipay. These types of payments will complete the transactions easier for customers, but on the backend, there will be a huge list of transactions set between vendors and the buyers. There will also be intermediate banks that will complete the transactions after some time. Digital payments will not have such a pile-up of backend transaction sets.
Digital payments will not have any service fee like digital payments along with the added advantage of quicker transactions. This digital yuan has been legal support and backup of the government, unlike some other cryptocurrencies. It implies that using digital yuan will be similar to issuing cash and confirming a secure transaction. This offers the government a good hold over the circulation of money. This is also not similar to cash and concerned authorities can have a good watch on all the transactions.
Major differences from Bitcoin:
- Bitcoin is a distributed form of cryptocurrency which implies that it is not completely controlled by any central authorities such as the central bank. But digital yan will be officially issued from the People’s Bank of China.
- Bitcoin is developed on renowned and secured blockchain technology but has a unique technical development from the digital currency.
- While Bitcoin has a completely anonymous nature, the advanced digital currency will have controlled anonymity.
Why is the digital currency the need of the hour?
- The use of digital cash will ease the ability to use new monetary policy tools. The comprehensive benefit of digital cash is not confined only to its users. But it has a major effect on the economy of the specific nation since the cash circulation will aid in decreasing the black money and other malicious activities. It will also enhance the optimal payment of taxes that will finally be helpful for even respective customers.
- Employing digital currency will give a boost to the efforts of the specific governments in negating any drawbacks in their services. It will also guarantee that recipients will get all the benefits that are released from the government. Even when any citizen will get access to all the advantages of digital currency there will also be some other exclusive advantages. As there will be a safer alternative to bank deposits in the form of digital currency, it negates the need for guarantees on those deposits.
- Several businesses can easily enhance the faith of their customers as credit cards are not always stored in their local or online sites. It has been seen that malicious individuals have taken advantage of these credit card numbers being stored and lead to cyber-attacks. A customer will not need to provide credit card numbers but only a temporary encrypted code for completing transactions. Customers will be assured that their sensitive information is safe while performing transactions.
- Even the users of this digital currency are excited about the possibilities of using this digital currency. This trend will aid the businesses that have adapted to the new mode and accepting digital currencies.
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