Chinese digital yuan vs bitcoin

Today, more than 80 governments around the world (covering 90% of global GDP) are working on or experimenting with Central Bank (CBDC) digital currencies.

In July 2021, only five countries launched CBDC. They are all island nations of the Caribbean: The Bahamas, Saint Kitts and Nevis, Antigua and Barbuda, Saint Lucia and Grenada.

Of all the major economies, China has moved towards a full-fledged CBDC with the digital yuan, also known as the electronic yuan or digital currency, electronic payments (DCEP).

Here, we explain what the digital yuan is and how it differs and compares with the original cryptocurrency: bitcoin.

What is digital yuan?
CBDC are government digital currencies. In China’s case, the digital version of the CBDC currency would be the Chinese yuan (hence the e-yuan). CBDCs are like stable coins fixed at a 1:1 ratio with a given Fiat currency.

So the digital yuan is actually nothing more than the digital equivalent of China’s physical currency: you keep your Fiat money digitally in a mobile wallet instead of a physical banknote in your pocket. Every physical banknote printed by the central bank has a unique ID, and therefore every digital yuan token issued has the same ID.

Unlike cryptocurrencies, CBDCs are generally not based on a decentralized blockchain because the Central Bank will try to maintain a clear authority over the bookkeepers. But a little later.

Is the digital yuan already in use?
The digital yuan, first proposed in 2017, has been in the pilot phase since April 2020.

From October 2020, the people’s Bank of China (NBK) sent millions of digital yuan to citizens as part of an attempt to test the technology, creating some buzz around it. This is still going into the summer of 2021.

Chinese digital currency $ 1.5 million
Chinese citizens can spend digital yuan at more and more stores across the country, including Walmart.


Join the Discussion

  • BrokerEUR/USD
    SpreadEX 0.6pips (variable) margin: 3.33%
    Core Spreads 0.6pips (variable) margin: 3.33%
  • Back to top