China &  Digital Currencies

China’s crackdown has turned the crypto world upside down, but there’s one way the country is pushing crypto convention— digital yuan.

The digital yuan is the first Central Bank Digital Currency (CBDC). It’s like crypto in the digital sense, but it’s centralized (unlike regular crypto). 🙅‍♂️

The Chinese government has been trialing the digital yuan for a few months. Now, it’s preparing the currency for use during Beijing’s 2022 Winter Olympics. ⛷️

Some advantages of the digital yuan/CBDCs include zero transaction fees, faster settlement times, and high security. On the flip side, it’s kinda scary the government will likely have control over everyone’s money. Oof.

For some emerging Asian economies, banking systems are undeveloped, so the digital yuan offers a strong value proposition. International adoption of the yuan poses a widespread threat to the US Dollar, and the Federal Reserve is skeptical of the proposed benefits of a Fed-backed digital currency.

Amidst all this debate, everyone’s forgetting about… privacy. Privacy is the basis of decentralized finance. Discussion of regulating and adopting CBDCs contradicts the idea of ‘free currency.’

Chinese officials claim there’s a need to reinterpret privacy, calling it “controlled anonymity.”

Source from Robinhood