What is the difference between the Digital Yuan and Cryptocurrency?

Digital Yuan and Cryptocurrency
Digital Yuan and Cryptocurrency

There was a time when people did all the things physically. Still, with the rapid technology change, everything has changed, and now people are also digital for any work, whether they have to do shopping, payments, meet people, etc. The cryptocurrency year was 2008 when it started, and that has changed the entire payment system of the world. Now people want to use cryptocurrency, but some countries have banned it, and China is also one of them because now they are launching the Digital Yuan (The digital currency of China). But people are confused about the difference between the digital yuan, a digital currency, and what we call crypto, a digital currency. This reading will give you the reason to differentiate between the digital yuan and cryptocurrency. For more information visit https://yuan-pay-group.net/.

What is cryptocurrency?

Cryptocurrency is not a new term in today’s digitalised world because it began a decade ago and four years ago (precisely 2008). The first crypto coin that came into existence was bitcoin which changed the perspective of the global payment system; now, many countries are making it legal tender for doing standard transactions, and now there are over thousands of digital cryptocurrencies. The term cryptocurrency came into existence to fulfil the loopholes of the traditional paper currency because anyone cannot use it globally, and centralised authority is continuously tracking you. So the founder wants to make a different currency where the users would be the actual owner of their funds without the involvement of third-party institutions.

What is digital yuan?

A digital yuan is a concept of reducing the paper notes or coins for the standard transactions so the government can track all the transactions that people are doing in the country. The digital yuan backed by the government means the centralised authority will always be back to control and manage everything. It is not a new concept, but a couple of countries are already in the checking-out phase. China banned cryptocurrency and is now working on launching its digital currency. They also threw some trials to check the process where you do not need an internet connection but need a smartphone and an application.

Difference between the Digital Yuan and Cryptocurrency

The digital currency is purely opposite from the cryptocurrency; you can see the difference given below:-

  1. Meaning:- Cryptocurrency is a concept of improving the loopholes in the traditional payment system to make it a global friendly payment system. Every person can do transactions at nominal fees without getting tracked by third-party institutions like the government and other financial institutions. On the other hand, digital yuan is the concept of using the domestic payment system in digital form, which means replacing the paper currency and coins available in physical form with a digital format controlled and managed by the government or central bank of the Chinese country.
  2. Authority:- Digital Yuan is a centralized authority because the government wants to track the spending of their citizens that you cannot track in the paper currency or coins. All the control is in the hands of the government and the central bank of china. But cryptocurrency is a fully decentralised currency that gives the right to the users to use the funds without tracking or involvement of the major banks or the government.
  3. Legality:- The digital yuan is working on legal frameworks since the central banks and the government of China are launching it, so it is evident that the digital yuan is legal tender in China. And they are also thinking of making it an international currency so you can use it in every corner of the country through a single app. But it is not a legal currency because it works on the blockchain platform but makes it legal tender in some countries like El Salvador. So the cryptocurrency’s legality depends upon the government, but the digital yuan is legal in domestic currency.
  4. Privacy:- In the digital yuan concept, the transactions get kept secret because only you and the central or the government of China can see the transactions and no other can track or see them. Since no one is working behind the crypto blockchain platform, all the transactions get publicly visible on the blockchain to everyone.
  5. Fees:- The government of China claims that they will not charge interest on the digital yuan transactions, which will make them more usable. But in cryptocurrency, you have to pay some fees for domestic and global transactions because of the transaction validation.
  6. Uncertainty:- Digital Yuan is a concept initiated by the government and the central bank of China. Hence, there is a certainty that it will live and always exist, replacing physical cash and coins, but the future of cryptocurrency is not clear whether it will work in the future.
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