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Competition for Bitcoin and Libra: China pilots Digital Yuan

  • China is preparing to carry out the testing phase of the Digital Yuan before the beginning of 2020.
  • The race in cryptospace and its key players: Digital Yuan, Facebook Libra and Bitcoin.

New reports indicate that China is about to enter the testing phase of its digital coin. The Digital Yuan will be tested in the cities of Shenzhen and Suzhou before the beginning of 2020.

The testing phase of the Digital Yuan comes at a time when China has decided to toughen its policy against crypto-exchanges. Its central bank has stated that it will impose a stricter monitoring policy on these entities.

During the last few months China has made headlines because of the role that the Digital Yuan will play in the future of the cryptocurrency market. At first it was thought that the Asian giant would open up to the trade of cryptocurrencies. Time has shown that China is more interested in blockchain technology, not in cryptocurrencies like Bitcoin.

Test phase of the Digital Yuan and the agents involved

According to reports, the People’s Bank of China will begin testing with banks and other important economic entities. The CBDC will be tested with institutions that can incorporate its use to the masses.

Important players include China Telecom and other service entities. According to the source of the reports it is expected that:

Compared to the previous pilot, this time the central bank’s legal digital coin pilot will exit the central bank system and enter real service scenarios such as transport, education and medical treatment, reaching end users C and generating frequent applications.

The People’s Bank of China has delineated the parameters of the test phase. The institution, according to the report, has selected the area, scenario and scope of the service to be implemented. The institution will continue to promote the advantages and forms of application that the digital Yuan will have during the test.

The institutions that will participate in the test will be free to choose how they will use the digital Yuan. Although the area of application of this first stage is delimited, an extension to other areas can not be ruled out.

Libra Facebook with greater resistance in Europe and Bitcoin ahead in adoption

The start of the test phase of the digital Yuan marks an important milestone. The People’s Bank of China will be the first banking institution to implement its CBDC. However, the race for domination has strong contenders.

Facebook’s stable coin, Libra, was projected as one of the most important contenders. As CNF has reported, Libra has met with great resistance from the regulatory bodies of global governments. Especially from the United States and Europe.

The European Union has published a report in which it exposes the risks that the implementation of Libra would have for the world economy. The report published by the presidency of the body also recognizes the potential of Libra. Since then the European Union has studied implementing its own CBDC, the digital Euro.

Europe’s digital coin is getting closer to being implemented. The first country to use it will be France. The test phase will start in 2020 with the participation of banks only.

Facebook’s Libra is in its testnet phase with more than 50,000 completed transactions. A European CBDC will bring greater resistance from regulatory bodies, as the digital Euro enters the race and attempts to catch up with the digital Yuan.

Meanwhile, Bitcoin continues to dominate adoption levels in the cryptocurrency market. According to a study by Deutsche Bank in Germany it is likely that Bitcoin and cryptocurrencies will replace fiat money in 2030.

This is the opinion of the institution’s chief analyst, Jim Reid. Bitcoin could gain more adoption as people lose confidence in the traditional financial system. Reid says this will be seen over the next decade.

Reid also recognizes that China and its growth is an important factor. With the entrance of the Asian giant, the digital coin race remains without a clear winner.

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About Author

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Reynaldo Marquez has closely followed the growth of Bitcoin and blockchain technology since 2016. He has since worked as a columnist on crypto coins covering advances, falls and rises in the market, bifurcations and developments. He believes that crypto coins and blockchain technology will have a great positive impact on people's lives.

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