Digital money is reshaping economies and banking. Currently, 80% of central banks worldwide are working on a digital currency, 90% of which are in developing nations. Chinese authorities have been working on sovereign digital money since 2014. DCEP is already being used to pay for education, transit, and other services in China.
How to Start Using DCEP?
Consumers may use an electronic wallet app to spend or deposit digital yuan. Unlike Alipay and WeChat Pay, which together control over 90% of the e-commerce sector, DCEP does not need internet access. To pay, just tap the two phones for the transactions.
The DCEP would be the first central bank digital currency. It would also be a significant step forward for blockchain adoption. By making the yuan a worldwide currency, the digital currency would help boost the yuan’s value versus the dollar. The traceability of DCEP will help China curb unlawful behavior and improve monetary policy. While DCEP resembles a cryptocurrency, it is distinct. It is important to note that DCEP is not a cryptocurrency.
China’s Digital Currency
DCEP was born out of a desire to enhance the yuan and include blockchain technology. Decentralization was not consistent with a centralized national currency. Even if e-commerce and mobile payment technologies are extensively embraced, creating a digital currency has several benefits for China. DCEP would facilitate money transfers, defend against counterfeiting and money laundering, and enable China to implement a more effective monetary policy. As a result, a lot of people are now getting interested to join the yuan pay group.
With the rise of Libra, other alternative currencies such as Bitcoin, DCEP allows China to keep control of its money while still making it worldwide. If other currencies become common, the dollar gains strength while the yuan suffers. The dollar dominates Libra’s currency basket and most of the corporations sponsoring it are American. Also, China will lose control over its monetary system, making criminal operations like money laundering easier.
JD.com, China’s biggest online retailer, accepted the digital yuan in early December. This means that China may soon adopt digital money. To boost awareness, JD is giving away yuan currency in a lottery, allowing 100,000 winners to use the digital money on its site. In October, a lottery in Shenzhen gave out 10 million yuan ($1.5 million) to promote and test the new digital money.
Will Fedcoin Be the US’s Digital Currency in the Future?
Fedcoin is a blockchain-based cryptocurrency backed by the US central bank. Fedcoin will have an exchange rate of 1.1 with dollar. According to a 2017 Yale analysis, a blockchain-backed Fedcoin would make sense in our existing economy and might assist expedite digital transactions.
Volatility and lack of central bank support hinder the viability of existing alternative cryptocurrencies and e-currencies. Fedcoin would also enable speedier transfers and lower costs. The US should create Fedcoin, a digital e-currency for the dollar, similar to China’s digital yuan DCEP.
With all the efforts being made by china to boost their digital currency, people are thinking to register in the yuan pay group for them to experience how they can benefit from it. Yet, before you come up with such decision, make sure that you already have an idea about the pros and cons.