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Digital Yuan: China expands implementation of state cryptocurrency

Digital Yuan: China expands implementation of state cryptocurrency

Following the successful testing of the state cryptocurrency DCEP during the Olympic Games in 2022, the People's Bank of China has decided to expand the areas for using the digital yuan.

According to a press release issued by the People's Bank of China, in deepening the pilot testing of the new currency, they faced  “new situations and new challenges in terms of convenience, optimization of inclusivity, and security.” However, the development of e-CNY is quite stable at the end of 2021, the volume of DCEP transactions amounted to $13.6 billion, and the number of digital wallets exceeded 261 million. Therefore, it was decided to expand the test zone, covering several larger cities, including Beijing, Hebei, Chongqing, Tianjin, Chongqing, Fuzhou, Xiamen, Guangzhou, and others. The bank will carry out additional technical and research work during the expansion of the test areas. 

Recall that the People's Bank of China launched the secret development of its own cryptocurrency back in 2017, but its work became public only a few years later, when President Xi Jinping revealed it. Read more about it in our article: Chinese CryptoYuan origins.

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Central bank digital currencies (CBDC)

CBDCs are a product of central banks, using which they try to compete with all cryptocurrencies. They almost completely copy the characteristics of cryptocurrencies, except for a few peculiarities. First, instead of decentralization, they offer centralization, i. e., only one organization can issue coins. The second thing is that there is no possibility to mine or perform DeFi in order to passively obtain new digital coins. Thirdly, CBDC is controlled by the state, and as a consequence, it can control transfers by imposing sanctions against countries, organizations or certain people. Moreover, there is no anonymity. 

Among major countries, the People's Bank of China is the most progressive in issuing such a currency. The secret development started back in 2014, but the world only found out about it in 2019. Today, testing of the central bank's digital currency, called DCEP, is in its final stages. 

Read more: Cryptocurrency and its types: altcoins, stablecoins, CBDC

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