China’s digital yuan demonstrates why cryptocurrencies like bitcoin are still needed

<p>This week, China's digital yuan will make its global debut, with foreign athletes and others at the Beijing Olympics being able to use it for the first time. People can use a smartphone app to access digital yuan, but it differs from other payment applications in that it is a digital form of the renminbi, which is issued by the People's Bank of China. </p> <p>The digital yuan has already been tested in several Chinese cities, with over $8 billion in transactions completed in the second half of 2021. China's efforts have prompted other governments to consider developing their own digital currency. According to the Atlantic Council, around 90 countries, accounting for more than 90% of global GDP, are actively studying a central bank digital currency (CBDC). </p> <p>CBDCs, some claim, will eliminate the need for cryptocurrencies like bitcoin. After all, do we really need so many different digital currencies? However, the contrary is true. The growth of CBDCs emphasises the necessity of decentralised cryptocurrencies that are largely private and unaffected by government intervention. </p> <p>While China's digital currency is an incredible endeavour that has the potential to provide numerous benefits, including payment convenience and efficiency, privacy is not one of them. In fact, the digital yuan will provide the government more visibility over its citizens' financial operations. </p> <p>In an interview, Yaya Fanusie, adjunct senior fellow at the Center for a New American Security, argued that modest payments may not require identification. "However, the government will be able to track all transactions, whether anonymised or not," he says. </p> <p>WeChat Pay and Alipay are two of China's most sophisticated mobile payment systems. Companies now collect a lot of personal financial data, but the digital yuan will make it considerably easier for the government to get it. The Chinese government can already obtain data from payment businesses, according to Fanusie, but with the digital yuan, they won't have to g