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How China Is Deploying Its National Digital Currency

Technology

How China Is Deploying Its National Digital Currency

by | Technology

Ben Constanty

CEO, Smartlink

Disrupting online payments with smart contracts.

As the world continues fighting COVID-19 and countries pile on debt, bankers and governments have realized now is the time to consider a centralized digital currency.

Between the IMF, United States, and Bitcoin, the idea of a government backed crypto is real.

China is the latest country to reveal their plan of offering a government backed digital currency.

Currently being tested in certain cities, they appear to be on the fast track to having crypto become the new normal.

🔎 Key takeaways

  • China is one of the first countries to being deploying a centralized digital currency.
  • The pandemic has forced countries to find effective and efficient ways to instantly send money.
  • However, since the process is in test phase we must wait to see the full impact of a new digital currency, backed by the government.

Understanding the Digital Currency

Covid accelerates deployment of digital currency in China

First, it is important to note that this is not like the cryptocurrency or digital currencies we know.

Bitcoin, Ethereum, and others are a decentralized currency, meaning no one controls them. With China’s digital currency, it would be state run and monitored.

While for the fundamentalists among the crypto world argue it defeats the purpose, many countries already transact largely over the Internet.

Why Now?

Pandemic accelerates Digital currency deployment

You may be asking why suddenly this is making headlines. The reason being is the pandemic was the catalyst to push projects into action.

These were always in talks, but with an impact like COVID-19, it made countries realize the importance of speed.

First, China will issue a card via the government for people to use. Then, this card will be attached to the government’s financial branch and allow them to push money out in minutes.

During the pandemic, this was critical to several countries to stabilize their economies.

Secondly, it allows the government to monitor money and better control impacts such as inflation or deflation.

When money is constantly being pumped into an economy, it becomes difficult to track where and how the money is being used.

With a centralized digital currency, they can do just that.

Lastly, it eliminates the need for cash and turns everything digital. Ultimately, this means that all purchases will be tracked.

In nearly every country, the ability to track spending and ensuring a stable monetary system is in place is extremely desirable.

Will this be in the United States?

American Digital Coin - FedCoin

Yes, the United States are already looking into a centralized digital currency call FedCoin.

Like China, the goal is to track spending and ensure a timely delivery of funds during extreme cases like COVID-19.

The stimulus package that was delivery earlier in 2020, it was done using direct deposit information used during 2019 taxes.

This allowed the government to push a button and send funds out to millions of people.

China has continued to be on the leading edge of technology but with China being a communist government, people remain skeptical.

People have often criticized China for currency manipulation and this new currency may give them even more power.

Regardless, it forces other countries to consider adopting a centralized digital currency as we push into the new age of money.

Ben Constanty

CEO, Smartlink

Disrupting online
payments with smart contracts.

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