Digital Yuan Gets Added To WeChat As Work On CBDCs Continues

WeChat, owned by Tencent and China&39s most popular messaging app as well as one of the nation&39s biggest payment platforms, has announced plans of supporting China&39s sovereign digital currency, the digital Yuan.

China had begun working on the digital yuan all the way back in 2014, but it has yet to be implemented on a nation-wide scale. However, WeChat&39s decision to allow the digital currency, which has since garnered more than 1 billion users to date, might provide it with a significant boost if the country&39 citizens start utilising it for various payments and transactions on a regular basis.

What is WeChat?

WeChat could very well be unfamiliar to consumers beyond China&39s borders, but it is pervasive within the world&39s second-biggest economy. As it incorporates several services, WeChat is often referred to as a kind of &39all-in one app&rsquo, mainly because it allows users to take advantage of various chat functions in addition to using WeChat Pay to make all kinds of purchases as well as hail cabs, taxis and even order meals. WeChat Pay lets customers pay for things in-store by showing merchants a barcode via their smartphones. WeChat Pay has even managed to gain nearly 800 million active monthly users. Adding digital Yuan capabilities would therefore seem like a no-brainer.

Even now, the PBoC (People&39s Bank of China), which is responsible for issuing the digital Yuan, also referred to as e-CNY, has conducted limited experiments in specific locations through lotteries during which the central bank has distributed modest quantities of the nation&39s currency to certain residents. With that being said, despite the lack of a specific time frame for a statewide deployment, there would appear to be several indicators which suggest that the PBoC is aiming to extend the use of the digital Yuan.

The PBOC has thus created an e-CNY app for consumers in specific Chinese provinces and localities. All residents living in those locations shall be able to download and subsequently sign up to utilise the digital Yuan as a result. In the past, the users were only allowed access to the app through invitation.

CBDCs Vs Crypto

It is no secret that the increased usage and popularity of cryptocurrencies has prompted governments and regulatory agencies all over the world to come up with a counter to these new digital assets, and this answer arrived in the form of central bank digital currencies (CBDCs). Despite many countries already working on their own respective CBDCs, China would nonetheless almost always be at the forefront of the conversation, as it was the Chinese government which had decided to put an all end to all crypto-based activities within the country last year, which also involved the shutting down of various mining operations and nation-wide crackdowns that resulted in many local crypto enthusiasts, traders and investors being forced to flee the country and Bitcoin&rsquos hash rate being adversely affected.

Ultimately, it is unclear as to how successful CBDCs will be in the future as certain nations have elected to opt for cryptocurrencies instead and we need only look at El Salvador officially making Bitcoin (BTC) legal tender for proof of this. Still, the work around the digital Yuan should not be ignored, as the usage of e-CNY could have great potential as we draw closer to the upcoming Beijing Winter Olympics, which is an event that has also caused some controversy as it had been reported that all visiting teams will be required to use the digital Yuan with seemingly little to no choice.