Why China’s Digital Yuan Will Disrupt Global Fin-Tech Innovation Everywhere
When we think of Fin-Tech we often think of PayPal, Square or Apple Pay. But in reality, it’s Ant Group, WeChat Pay and ultimately China’s Digital Yuan that is more innovative.
Washington could soon expand its war against Chinese tech companies by setting its sights on Ant Group, the crown jewel of billionaire Jack Ma’s empire. This is also because if China’s Digital Yuan is a tremendous success, it can and will eventually take out the American dollar as the global reserve currency.
The scale of China’s Digital Yuan will make Facebook’s Libra project look like a failure before it even launches. China’s digital currency will create a new internet of services, and people don’t realize it’s coming.
- Last week, the government in Shenzhen carried out a lottery to give away a total of 10 million yuan (about $1.5 million) worth of the digital currency.
- The winners can now download a digital renminbi app to receive the digital yuan and spend it at over 3,000 merchants in a particular district of Shenzhen.
- The digital yuan is not a cryptocurrency like bitcoin. Instead, it is issued and controlled by the People’s Bank of China, the country’s central bank.
Better than Bitcoin? Well, sure, because it will sync with that kind of capitalism, the Chinese consumer and China’s own social credit system. Bitcoin is a nifty digital gold for some, but China’s digital yuan will have legit commercial potential and help Chinese apps and services go even more global.
The bifurcation of the internet means China’s Digital Yuan is a symbol of the new world, a world where China’s economy surpasses that of the United States as early as 2026.
China is a powerhouse of innovation in the 2020s. They can roll out scale and speed that won’t exist elsewhere. China’s central bank urges faster digital yuan roll out as other countries begin tests, says the headline.
China wants to be #1 and clearly it should accelerate its efforts to launch a sovereign digital currency. This would elevate it as an important part of an “independent” financial infrastructure in the digital era, a top Chinese central bank official has said.
A digital Yuan will facilitate companies like Alibaba, Tencent, Didi, ByteDance, Meituan, Ant Group and thousands more to scale better. Mini-apps and a digital currency will mean China’s ecosystem of mobile convenience is substantially ahead of the West.
Combined with facial recognition and an increasingly sophisticated social credit system it will mean a perfect balance of technology and public policy.
It’s no secret in blockchain and crypto circles that the U.S. is way behind in the space in innovation. The Chinese are already far ahead of the U.S. in the digital currency race. Their DCEP, or Digital Currency Electronic Payment, is due to launch by the end of the year.
China has started one of the biggest real-world trials for its digital currency as it pushes closer toward creating a cashless future. It will make Facebook, PayPal, Square and the best blockchain experiments look small. It will even pressure the Euro zone to make their own digital currency as well.
With Japan and Europe’s economy dipping in 2020 and 2021, China is poised to lead the trends in financial technology innovation and central banks are watching closely. China’s internet will just be superior. And to understand its future of E-commerce and AI as a service mesh, you have to understand what’s coming.
A payment system created by the Chinese state and known as Digital Currency Electronic Payment (DCEP) will have a fair chance of becoming the dominant global payment system by 2030.
There are a multitude of reasons that in spite of very dangerous politics and human rights policies, China will still lead in this area. DCEP will be successful because there are a lot of Chinese people living outside of China — 39 million Chinese live outside of the country.
China’s foray into E-commerce in a mobile era is just superior in nearly every way. It’s only natural this will end with superior payment systems. Ant Group’s prominence is no accident.
The Digital Yuan is the crown jewel of the Chinese technology dynasty. The digital yuan is not a cryptocurrency like Bitcoin. Instead, it is issued and controlled by the People’s Bank of China, the country’s central bank.
It is not looking to replace digital wallets like Alipay or WeChat Pay. It will likely work together with them and other banks. In fact, it will be one of the instruments of the globalization of Chinese technology into every corner of the globe.
Since the Chinese State can use its companies together like an army of innovation in the fast paced progress of technology, their model of overlord capitalism is far superior to the American version that has stunted innovation and led to bloated companies like Google, Facebook and others.
China’s venture capital, startup ecosystem and specialization by city are all far superior ecosystems to what the United States is doing. The amount of data, consumers and economic momentum China has is unprecedented in human history.
China’s digital yuan has been in the works for the past few years, but here again it truly begins to mesh in 2021 with the social credit system and the arrival of Ant Group as a publically traded company in its Chinese dual listing.
Few in the crypto or fin-tech world can fathom what China is creating with its Digital Yuan. The DCEP utilises a blockchain technology, a type of digitized ledger used to verify transactions. Blockchain acts as a universal record of every transaction ever made on that network, and users collaborate to verify new transactions when they occur. However it will be used to favor Chinese products and companies over others.
Hooked up to facial recognition, barcode scanning and tap and go payment technologies, the digital yuan transactions will be hooked into the most sophisticated AI based society the world has ever seen. China’s convenience won’t just be a cashless society, but a world where data and information is everywhere and fuels a new economic golden age. China plans to launch DCEP later this year. But so far, the People’s Bank of China has not given an exact date for the nationwide launch.
The Chinese government believes that if some other countries can also use the Chinese currency it can break the United States’ monetary sovereignty, and they are right. China isn’t just doing digital transformation, E-commerce and payments better, they are creating the next layer of the internet, for all of us.
China is integrating facial recognition into its society in a way that would be impossible in America, at least for the foreseeable future (though Amazon will try). As central banks all over the world race to set up and implement their own blockchain based sovereign digital currency, it’s clear China will win this race.
What it means for the future of fin-tech will shock even the most veteran investors, analysts and technologists. China will create the next version of surveillance capitalism, after Google, after Facebook and the heir apparent to the U.S. dollar.
The Digital Yuan will create a hub for its own tech dynasty to flourish at home and abroad in a way that was previously impossible. China will in effect be the first country to truly use blockchain to its full potential. The digital yuan is not to be mistaken as a form of cryptocurrency.
Rather, it is issued and managed by the central bank, serving as the statutory, digital version of China’s physical currency and giving Beijing a better grasp of its currency circulation. It’s meant to supplement, not replace, third-party payments apps like WeChat Pay and Alipay in a country where cash is dying out.