China becomes first major economy to launch digital currency

 

The Chinese government has begun issuing digital currency to its citizens, becoming the first major economy of the world to officially launch a block chain version of its own currency.

 

750,000 recipients have been determined by a lottery system and can spend their digital Yuan in stores and online using a special app, according to a report by  The Wall Street Journal.

China is only the second country and the first major economy to officially launch a block chain version of its own currency

 

App-based payments are already very common in Chinese businesses, so merchants were quick to adapt to the government’s new offer. Starbucks (world's largest coffeehouse chain) is reportedly among those already accepting the degital Yuan, as is the Chinese Communist Party according to a report published by  Statista (a German company specializing in market and consumer data)

Ubiquitous (found everywhere) digital payments and tight government surveillance have also to a plethora of payment data already available to Chinese administrators

 

This knowledge on how people spend money will only grow with the implementation of the digital Yuan, even though the country’s Central Bank has said it will limit traceability and create what it calls “controllable anonymity”.

 

With the launch of the digital currency, every Yuan in circulation will either exist as physical or as digital currency.

 

Analysts expect the Chinese government to raise the amount of digital currency in the future, thereby lowering the amount of physical currency available in the market. Some even think China plans to make all Yuan digital at one point.

 

According to Bloomberg, the sand dollar of the Bahamas Central Bank launched last year and was already being accepted in stores in the capital Nassau. Bloomberg identifies four more countries – South Africa, India, Pakistan and Thailand, with concrete plans to launch their own official crypto currencies soon.

Crypto currencies such as bitcoin have foreshadowed a potential digital future for money, though they exist outside the traditional global financial system and aren’t legal tender like cash issued by governments.