People’s Bank of China has launched the digital Yuan for retail payments in the Chinese market, which is a significant first step that any economy in the world has taken. Some of the other economies are working on creating their digital currency. Still, China is more passionate about creating a centralized currency with complete government control, and the money flows through these centralized channels. Only the bank can have the authority to convert the Fiat currency into digital Yuan and vice versa. China is pushing its economy towards complete digitalization. The digital Yuan was created in 2014, and in a short time, China started its actual world trial in its four major cities.
Blockchain is a decentralized platform currently used by cryptocurrencies to record and hold the transactions of crypto users and establishments that are accepting Bitcoin payments. Blockchain uses nodes to record transactions. After verifying by all the blockchain nodes that the transaction is recorded first up, the transactions recorded on the blockchain are irreversible and immutable. Not only cryptocurrency but other industries are also coming up with blockchain and its security. It is clear to the people’s Bank of China and the official financial authority of China that the digital Yuan does not use blockchain or distributed Ledger Because it is hard to handle any decentralized transactions made with digital Yuan.
Blockchain network feature of digital Yuan: –
To get detailed knowledge about the connection between blockchain and digital Yuan, we have to study one more concept called BSN.
What is BSN?
A global framework launched in 2020 for developing and operating blockchain applications with a wide range. BSN Provides advanced facilities to companies and developers to build some next-generation decentralized apps using blockchain, which is interoperable under a specific and uniform environment. It is a network or an infrastructure that will Facilitate nationwide interconnectivity of technology. If the BSN project remains successful in the future, it may also offer some the benefits like Data sharing, Value, and exchange of digital assets between two parties. Through the BSN infrastructure, it is clear that the Chinese government noticed that blockchain is a backbone of all the decentralized applications or a new phase for connectivity over the Internet.
Do digital Yuan is a blockchain technology: –
No, not; digital Yuan is not a blockchain technology. The China officials have made it clear that the digital Yuan does not use any blockchain network to facilitate its transaction and domestic or international markets. They have given that keeping a close eye on the decentralized medium of receiving and making payments takes a lot of work. Apart from this, the blockchain-based application does not require identification proof of the wallet holder. Keeping it aside to use and make payments through digital Yuan, one needs to Associate some identification before getting registered, Making payments, storing money, and other things that can be then through a digital Yuan wallet.
Is there any connection between the two projects: –
These are two different projects but have a vast scope. Through a study, we learned that people would start choosing the digital one over any decentralized currency once the digital one is fully developed. The difference can be made clear by assuming that BSN is a cryptocurrency-based platform and Digitally Yuan has gatekeepers like the government and its monetary affairs. The use of blockchain, which is assumed to be the most secure method of any centralized currency, gives power to Bitcoin and other cryptocurrencies. Blocking also creates distrust among the users of cryptocurrencies because they do not have government interference in their monetary affairs. Furthermore, blockchain provides additional security for the funds of traders invested in them.
According to a study, it is assumed that after the development of the BSN network Chinese government is working on creating a Universal digital payment network. That will facilitate its user-standardized currency transfer from any source or any information. It will also support the Central Bank of digital currencies from different locations. It indicates that the Chinese government is focusing on developing a centralized digital payment system and promoting its digital currency, the digital Yuan.
China will soon create a suitable environment for accepting the digital Yuan by the different countries and the countries in trade relations with China. It is clear that the digital Yuan does not have any blockchain feature; it is a centralized digital currency, just like another form of cash. China has processed the digital Yuan concept very fast, creating a chance of technical issues due to the fastest growth.