According to the latest reports, China’s Digital Yuan can pose a threat to Bitcoin and other Cryptocurrencies in 2021 as they want to weaponize their digital currency.
China is willing to gain greater control over the world’s economic power, i.e., the global financial system.
However, the digital yuan is not a virtual currency like Bitcoin, but it is provided and managed by the country’s central bank or public bank of China.
The central bank is also responsible for distributing the same to commercial banks.
On the other hand, the government is inspired by Bitcoin’s theory, and they created a centralized ecosystem for the traditional currencies, which will act as a digital payment.
On one side, other countries are finding issues to introduce this digital payment framework while China already announced Central Bank Digital Currency (CBDCs), which will be managed by the central authorities.
China is already leading in the progress of maintaining digital base money.
Why China’s Digital Yuan Pose A Threat To Bitcoin?
Digital Yuan is a digital version of China’s traditional currencies.
The only difference between the two is that the Digital Yuan is a Digital Currency Electronic Payment (DCEP) offered by the People’s Bank of China, while Bitcoin is completely a decentralized currency.
This can pose a warning to Bitcoin and other virtual currencies because the benefits of both currencies are almost similar.
Digital Yan is a new payment system created by the Chinese government, and this payment will lead to success because there are more than thirty-nine Chinese people living outside China, and they will use this payment framework.
Digital Yuan promises to its people to maintain a secure network because it is backed by the government, unlike Bitcoin and other virtual currencies.
China began testing CBDCs this year only in some of the selected cities.
Cryptocurrencies exchange lack security and other financial stabilities that forces people to move towards Central Bank Digital Currencies or Digital Yuan, according to the bitcoin up trading software.
Even it is believed that if other countries started to use Digital Yuan (Chinese Digital Currency), then it can break the monetary sovereignty of the United States.
According to BBC, “One day everyone will use China’s Digital Currency.”
The statement describes the worth of this digital currency.
Benefits Of Chinese’s Digital Yuan
The benefits of the Chinese Digital Yuan over Bitcoin are numerous.
Actually, it is a token-based digital currency that includes Blockchain technology to verify each transaction.
However, the process will be managed by the central government of China.
It includes the following benefits:
- Faster payments
- Secure transactions
- It maintains the stability framework
- Government-backed currency
- Secure store of value
- True price stability
- Uses Blockchain technology
- The costless medium of exchange
Thus, these are the benefits of Chinese Digital Yaun over other payment methods.
This was introduced to maintain the future of traditional currencies, and they reframed it digitally.
China Wants To Weaponize Its Currency
Many experts have signaled Digital Yuan as a Chinese strategy to control the world’s global financial system.
In order to make the payment procedure more secure, the centralized digital currency uses some elements of the Blockchain technology so that people can have faith in this centralized payment system.
Thus, the introduction of this digital currency will allow the government to manage the money supply of the country.
The growing need for Digital Yuan also performs Beijing’s wish to minimize the Country’s digital payment services.
Moreover, the European government has supported this payment infrastructure while other countries are still finding ways to introduce the digital cashless system.
The Bottom Line
The future of Central Bank Digital Currency is bright, and China is already leading the way towards the digital ecosystem.
Digital Yuan already poses a threat to Bitcoin and other internet currencies.
The benefits of this centralized payment system are better because it maintains the stability of the financial system.
Thus, Digital Yuan is giving tough competition to other financial systems of the world.