China launches its own cryptocurrency: What does it mean for the world?

China made its dream a reality official digital currency that is governed by the People's Bank of China (PBOC)This is a milestone that marks a significant advance in the field of cryptocurrencies and blockchain technology in the Asian giant. This event was announced by Forbes Financial News and has generated great concern among banks and governments around the world, as it would test China's growing power and influence on the global stage.

The article addresses all the features of the digital yuan. This effect means that it focuses on the goals, the underlying technology, its operational functioning at the national level and in the globalized economy and its integration with mobile wallet applications and with the rest of the traditional financial system.

Also, reflect on the strategy that could be behind this initiative and its potential global impact, as China has been monopolizing once Western markets. Finally, lessons are drawn for the rest of the world, highlighting the importance of innovation, control over the financial and stock market system, economic sovereignty in a global context, and technological leadership used in the development of digital currencies.

What exactly is the digital yuan?

The digital yuan, too called digital renminbi, digital RMB, electronic Chinese yuan (e-CNY) or digital currency electronic payment (DCEP) It is a digital asset issued by the People's Bank of China (PBOC). That is, it is governed by the nation's economic policies established by this organization, which is the country's central bank. This is the first digital currency launched by a major economy.

This asset It has the same value as the traditional forms of the renminbi or yuan of banknotes and coins and is considered legal tender. It was designed to facilitate instant national and international transactions on a blockchain.

Your goal is be faster and cheaper than traditional financial methods. In addition, its underlying technology allows transactions to be made directly between two devices without the need for third-party intervention.

Faced with this phenomenon, Some analysts believe the digital yuan could be used by the Chinese state as a surveillance tool. and control over users' financial activities.

DeFi Cryptocurrencies vs. CBDCs

Cryptocurrencies issued by a central bank, in this case the digital yuan issued by the People's Bank of China (PBOC) They are called CDBC, which stands for central bank digital currencies. which gives them their name by their acronym in English.

A Unlike Bitcoin (BTC), Ethereum (ETH), Cardano (ADA), Solana (SOL), and Dogecoin (DOGE), which operate on blockchain networks or decentralized blockchains, CBDCs are digital currencies issued and backed by various governments. that cause them.

These have been designed and created to integrate directly into the existing financial system. In this sense, The digital yuan is promoted by the Chinese government. But several states are already planning, researching, or implementing their own versions. Among the most important initiatives are those of Bahamas, Jamaica and Nigeria. While The European Union is developing the digital euro, which could be launched in October 2025.

The digital yuan and blockchain technology

To instrumentalize the digital yuan, China decided to create its own blockchainThe nation's authorities were concerned about the decentralized nature of blockchains, which can facilitate transactions without the intervention of authorities.

In this sense, they maintain that The DeFi blockchain could be used for illegal activities. and unauthorized payments. Hence, they promoted the development of a centralized, government-controlled version called Blockchain-Based Service Network (BSN).

This was launched in 2019. Unlike decentralized blockchains, The BSN is a system authorized by government authorities of the nation and allows the government to reverse transactions if necessary, which they claim provides transparency.

China hopes that this network will eventually replace the SWIFT system in the near future. (Society for Worldwide Interbank) as a more secure method for making international payments. This is a global network that allows financial institutions to send and receive all information about transactions made through its platform and in a safe, standardized and reliable manner.

Now, The Chinese CDBC runs on a blockchain. And like all of them, it's a database of this nature. This means that information is distributed and shared among the nodes (terminals or computers) of a computer network.

The primary function is store information in digital format. This type of technology, although it is especially used in cryptocurrency systems such as Bitcoin, Ethereum, Solana, DogeCoin and Cardano, among thousands of others, serves to record transactions in a secure and decentralized manner. The key innovation lies in its ability to guarantee data fidelity and security without requiring a trusted intermediary.

The main difference between a conventional database and a blockchain is how they structure, store and present data.While a typical database organizes information into tables, a blockchain groups data into blocks or segments that connect to each other to form a cryptographic chain.

Once a block or fraction is filled, a new block is linked, connecting it to the previous block. This allows you to create an irreversible timeline in a decentralized system that is accessible to anyone who accesses the Internet and that blockchain.

In consecuense, They can be used not only for cryptocurrencies and its operations, but blockchains They can store different types of information: This technology allows digital data to be recorded and distributed without the possibility of editing or deletion, which also makes it known as distributed ledger technology (DLT) which is very secure and reliable.

What is China seeking with the digital yuan?

By creating and promoting the use of the digital yuan As sovereign virtual money, the Chinese government pursues three main goals:

1. Gain a greater understanding on the flow of money within the country to optimize monetary policy and combat illegal activities such as money laundering. 
2. Regain and maintain control over payment systems, which are dominated by private companies such as Tencent's WeChat Pay and Ant Group's Alipay.
3. Strengthening the international position of the yuan in the future for marketing in transoceanic agreements.

Like this digital asset uses its own digital wallet, the yuan could become an alternative to existing payment platforms offered by large Chinese technology companies.

A key aspect of the digital yuan that marks a milestone in operations of this type is its ability to conduct transactions without an internet connection, making it especially useful for users in rural areas. However, this is only achieved by allowing two compatible phones to perform operations simply by bringing the devices close together.