Digital Yuan Wallet Apps

Digital Yuan is the digital currency of China. It was first launched in 2014 and has been working (test working) since then. The Digital Yuan is not a crypto currency. It is controlled by the Central Bank of China. The Government of China has plans to launch the currency internationally at Winter Olympics 2022. It is equal in value to fiat currency (Paper currency).

How does Digital Yuan work?

There are two aspects in the working of the Digital Yuan. Distribution and Expense (how people spend it?). The digital Yuan is distributed by the central bank of China to the commercial banks. The commercial banks then provide the digital currency to the public. The customers can exchange cash for digital yuan. People have to use a mobile application to receive digital Yuan. These are called the Digital Yuan Wallet Apps.

Why is it in news now?

The Digital Yuan Wallet Apps are now available in Android and Apple stores. The app was first launched in 2019. The number of users using the app has increased to 10 million.

Is it similar to Bitcoin?

No. It does not work like other digital currencies like that of bitcoin. Bitcoin is not controlled by a central authority. It is controlled by the market. Say a company releases digital currency X. The value of X increases in the market if the business of the company grows. If its exports are higher than the imports. However, this is not the case with Digital Yuan. The value of Digital Yuan is completely controlled by the central bank.

Digital Yuan is backed by gold

The Chinese citizens can exchange Yuan for gold anytime. Unlike UK, India and US where gold at times exists in paper, in China it is real gold. They exchange Yuan for real gold. This system is allowed for Digital Yuan as well.

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