China’s virtual currency – the digital yuan – is set to make its official debut, and many residents and potential users aren’t happy about the way it’s structured.
The Digital Yuan Isn’t for Speculation
Recently, the country issued a new law that would allow for the creation of such a coin. China had commented in the past that the digital yuan is designed to assist the nation in competing with Libra, the new cryptocurrency project being set forth by the social media conglomerate Facebook.
For the most part, the digital yuan will operate just like any other cryptocurrency with one tiny difference… It will not be utilized for speculative purposes. Unlike other forms of virtual currency, such as bitcoin, Ethereum and bitcoin cash, the digital yuan will work very much like the paper form of the fiat currency, meaning it will likely be utilized as a method of payment for assorted goods and services.
One would think this to be a major step forward for any form of crypto as this is what digital currency was originally designed for. Strangely, however, many aren’t too happy about this little tidbit, and several social media users in China are posting their disappointment to their accounts, with some individuals claiming that there won’t be “any fun” in the cryptocurrency.
If you don’t allow me to speculate on the digital form of the yuan, I’ll speculate on other things, like foreign exchange.
Mu Changchun, head of the People’s Bank of China, explained in a statement:
The currency is not for speculation… It is different to bitcoin or stable tokens, which can be used for speculation or require the support of a basket of currencies. The top-level design, formulation, functional research and testing of the Digital Currency Electronic Payment has been completed.
He also commented that pilot programs for the currency are set to be rolled out in the coming months to garner users for the coin and further establish its position in the crypto space.
Spying on People?
Many have stated their concern regarding the properties of the digital yuan, stating that its position as a potential “bitcoin killer” could wreak havoc on the industry in that it could be utilized to spy on the money habits of citizens. One financial writer – Andy Mukherjee of Bloomberg fame – stated:
A roller-coaster decade – not just for banking and money but also for privacy and politics – may just be the beginning… [China’s digital yuan is] far bigger than [bitcoin]. The crypto yuan, which may be on offer as soon as 2020, will be fully backed by the central bank of the world’s second-largest economy, drawing its value from the Chinese state’s ability to impose taxes in perpetuity. A digital yuan could bypass [the current deposit-based banking] system.