Home » Digital Yuan vs Bitcoin: Understanding The Key Differences That Sets Them Apart
No one knows who created Bitcoin, but still, it managed to become one of the best performing and highest-rated cryptocurrencies in the market. Check Yuan Pay Group to improve your bitcoin trading skills. China laid down its best minds along with The People’s Bank of China to create Digital Yuan with a motive to fulfil the country’s demand for digital currency and beat Bitcoin in the long run.
However, the one thing that sets Digital Yuan apart from Bitcoin is its centralized nature. While Bitcoin is known worldwide for its decentralized nature and offering anonymity to its users, e-CNY, on the other hand, is a centralized currency owned solely by the Chinese government. So, first things first, e-CNY is only available to Chinese people.
The concept of investing in Digital Yuan and e-CNY is similar to investing in other Chinese government-issued bonds. Additionally, many other things set these two currencies apart in many ways.
Regulation By Central Authorities
Bitcoin is decentralized, and everything revolves around blockchain, making it one of the most secure and transparent cryptocurrencies ever made. However, blockchain technology is not without its flaws. It was designed to work with mathematical formulas and codes, but it has become vulnerable as hackers can create fake blocks by spending enough money.
So far, no one has ever been able to generate a successful fake block as of late, and this is an undeniable fact. However, e-CNY, on the other hand, has its own set of disadvantages, like a central authority that controls its supply and demand. The People’s Bank of China has a significant role in supporting Digital Yuan. Ultimately, this centralized nature kills the privacy and anonymity of these digital coins.
Role of Government
Another thing that sets apart e-CNY from Bitcoin is that it’s a currency backed by 14 million people in China. Most of those active users of Digital Yuan are government employees and government officials. Initially, there were significant changes made to the currency by The Chinese government, and all these changes have been reviewed in detail by Digital Yuan, which is incorporated into their technological framework.
However, Bitcoin is a market-driven currency without any support from any central authority or country. The only source that backs Bitcoin is the social contract between its user community and developers, who always try to make sure it works smoothly and addresses bugs or any other technical issues.
The main advantage of Bitcoin is the transparency in its blockchain and the high level of security it offers. However, when it comes to Digital Yuan, the motivation behind its creation was to have a firm grip on digital currency, The People’s Bank of China. This conception led to the development a new technology that made it possible for the central bank to access data stored in any transaction made with Digital Yuan.
Bitcoin is an open-source technology that uses unique identification info called hash function to generate Bitcoins and track a certain amount in the blockchain network. However, anyone can see any details about your transactions or payments as everything is available on a public ledger for everyone else on the internet.
Almost anyone from any part of the world can access and own Bitcoins and use them for making low-cost international transactions. However, Digital Yuan is only accessible to users based in China only. Gifts, bank deposits, and trading of e-CNY are also only allowed for Chinese citizens who raised the equivalent of USD 1,000 or more through digital transactions. The smaller amount of e-Yuan is made available by bank deposit only.
The public ledger of Bitcoin is what makes it trustless and decentralized. Anyone can check at any given instant how many Bitcoins are in circulation, where they’re going etc. On the other hand, the ledger for e-CNY is entirely centralized and only available for select authorities and individuals. That’s why the currency is called Digital Yuan and not digital money. You don’t need to trust anyone to know that the money is there.
However, The People’s Bank of China has enough reasons to make sure they remain ahead in the digital currency race while still keeping it connected with the flaws and vulnerabilities of its predecessor, Bitcoin.