The Bank for International Settlements (BIS) recently released a report in which it recommends that all countries in the world create their own electronic money – CBDC (Central Bank Digital Currency) to replace cash payments. China has already done this. The world’s first launch of digital national currency took place. New Chinese cryptocurrency does not have its own name yet. The authorities of PRC so far use the abbreviation DCEP (DC/EP – Digital Currency Electronic Payment), or call it Crypto Yuan. This cryptocurrency is blockchain-based. Technology was developed and patented by the People’s Bank of China (PBC or PBOC) at its research institute. Developments have been carried out since 2014. CBDC of China is based on the BSN – China’s Blockchain Service Network.
Why does China need his own cryptocurrency?
According to Yi Gang, the Governor of the Central Bank of China (aka People’s Bank), crypto-yuan is needed to replace part of the Chinese money supply, primarily cash. At this same time, deposits and account balances will not be affected yet. The new Digital Yuan, as a means of payment, is intended for the retail sector and services in the domestic market of China.
In the future, it is planned to oust US dollars from the digital payments market with the help of Crypto Yuan and shake the dominance of the American currency, or even replace it with the new main world currency – the Digital Yuan. All this is the part of the Chinese grand strategy to lead the digital transformation of the world economy.
The next winter Olympics in Beijing, scheduled for 2022, will help in popularizing cryptocurrency DCEP.
Already today, many Chinese people don’t use wallets and cash, especially young people. Settlements are made through Alipay and WeChat Pay. The digitalization of Chinese society is the highest in the world. Thus, the prospect of a complete crowding out of cash with crypto DCEP looks very real in just a few years.
There are big doubts about the global reach of Chinese cryptocurrency, but … hmm … yeah …
What is DCEP price and where can I pay?
So far, DCEP is available only within China, and the rate is very simple: 1 to 1. That is, for 1 fiat (regular) Yuan, they give 1 digital Yuan. And this course is unlikely to ever change.
In essence, cryptoyuan is a stablecoin, with all that it implies. Such a powerful stablecoin with the support of the second world economy has every chance of crowding out the rest and, by right of the first, to become the only representative of a stable cryptocurrency in-law. However, it is still difficult to predict anything, because the European Union, Russia and the United States are already developing their national cryptocurrencies CBDC. And so far everyone has a chance to catch up with China, if they hurry.
The first cities to introduce China’s new cryptocurrency are:
- Shenzhen (Guangdong, South China)
- Suzhou (eastern Jiangsu)
- Chengdu (capital of Sichuan)
- Xiong’an New Area (North China)
In Xiangcheng district (one of Suzhou’s districts), the government begins to pay half of the transport subsidies by Digital Yuan to civil servants. These funds will be available in a special app, they can be spent in a number of partner stores of the test launch or simply transferred to the account.
How and where to buy Crypto Yuan?
The DCEP crypto-yuan app has already been released. Currently available only for residents of China. The application allows to make calculations and exchanges of digital currency, pay and accept payments using QR codes, and even make transfers in the absence of the Internet – through the NFC interface between phones on a touch-to-pay basis. Apparently, such offline transactions of China digital money will be synchronized with the system at the next Internet session.
By the way, the system itself is centralized. Built in two main levels:
- At the first level, the Central Bank of China controls emissions and works with commercial banks.
- At the second level, commercial banks organize the crypto-yuan turnover with organizations and individuals.
There are pros and cons to this DCEP architecture.
Plus – in the high speed of payment processing compared to other cryptocurrencies. Cryptocurrencies such as Bitcoin are decentralized (most of them), and due to the need for multiple confirmation of ongoing transactions, they work very slowly. Centralized cryptoyuan allows you to buy and sell a product or service almost instantly.
But such a system has a big minus – it is not confidential. Cryptoyuan does not provide anonymity for payments. It is difficult to expect anonymity from China, a country that collects a database of digitized faces of its citizens, and monitors them through a CCTV system with artificial intelligence. In official statements, the PRC goverment promise to “protect the privacy of users”, but of course, they will control every payment.
A kind of Schrödinger privacy – it is there until the authorities whish to look at you …
The Central Bank of China can easily track any payment, and maybe even the whole path of every Crypto Yuan. When using a specific technology stack, the central bank will see when and in whose hands each particular Digital Yuan has been.
On the one hand, this is unpleasant – the whole life of every person becomes completely transparent. On the other hand, the security of society is growing, because such control will enable very effective combating of illegal activities, such as money laundering, bribery or terrorist financing.
In the future, the above-mentioned application will expand to the scale of a single digital interface, replacing the internal passport and allowing Chinese citizens to receive all public services, including participation in electoral votes.
Why buy cryptoyuan?
Considering that Digital Yuan is equal to the usual one, there is no difference in rates, and there is no chance to speculate here. It is also not worth investing in the hope of an appreciation of the Chinese currency against the dollar – the authorities of the People’s Republic of China periodically lower the Yuan rate to “maintain a stable exchange rate at a rational level.” Since China is the “world factory of everything”, a surplus of manufactured goods is unacceptable, and a low CNY exchange rate allows to increase sales. Such a monetary policy of the Middle Kingdom leaves no chance for currency speculators.
You can buy Chinese DCEP cryptocurrency only then to redistribute your savings by investing in one of the world reserve currencies.