China’s Digital Currency Has Been Used in 3 Million Transactions worth Over a Billion Yuan So Far

The people’s bank of China (PBOC) has been thinking about some sort of digital currency since 2014. China’s digital currency research institute which is in charge of digital currency development and testing was first inaugurated in 2017 when it invited major state-owned commercial banks and other influential institutions to help them with the design of a closed pilot scheme known as the DCEP system. In April, at the peak of coronavirus coverage, china launched digital currency electronic payment DCEP in four cities. Government workers were reportedly paid 50% of transport subsidies in DCEP to introduce it into circulation. DCEP is notably far ahead of any of the major economies in respect. DCEP is the digital version of the yuan, china’s currency. It works on a two-tiered system. The people’s bank of china issues DCEP to smaller commercial banks who then in turn issue digital wallets to customers which access via smartphone app authorized by the people bank of china. Some describe DECP as cryptocurrency which is true in the sense that it is also electronically paid but there are still many differences between these two. Unlike most crypt currencies, DCEP doesn’t use blockchain technology, it can operate offline and it functions based on the traditional theory of currency.

DCEP has three interesting advantages over the usual mobile payment system:

  1. Firstly using a wallet issued directly by the PBOC cuts any third party. And it eventually causes lower transaction cost for businesses which use mobile payments.
  2. Secondly, DCEP also works without an internet connection for two reasons. Firstly, so that it can be adopted by rural communities and secondly so it can still function as a medium of exchange if there’s some sort of technological blackout.
  3. DCEP is more hygienic than cash. In the wake of the coronavirus, some shops in china stopped accepting cash for fears of infection. These problems could be easily avoided by Using DCEP instead of cash.

Better control of the economy:

 China’s digital currency not only allows for better monitoring of the economy but can also guarantee monetary sovereignty in the future. If a state can access information about literally every transaction, it should able to anticipate and understand economic booms and busts to avoid economic crises, tax evasion, money laundering, and even terrorist financing.

Recently, “using DCEP around 3.13 million transactions have been processed”, reported by the deputy governor. Excluding just the privacy concerns of the users of DCEP regarding transaction history, china’s digital currency has proven to be progressing positively due to its massive advantages explained above. Due to recent quarantines, people preferred to pay all of their bills from home. Also, all money transactions were made through DCEP wallets rather than going out to visit banks. Hence this coronavirus situation pumped up the use of DCEP by residents of china. China knows that digital money is the future and it’s just getting there.