China most likely will be the first country to adopt fully digital currency. We don`t know the exact date when the digital currency will be fully rolled out but the People`s Bank of China is already partly testing the currency in few different Cities like Suzhou, Xiong’an, Chengdu, and Shenzhen. It has been mentioned by several sources that China might be planning to use digital currency during the Winter Olympics which suggests 2022 to be a possible target date.
Now the main question that many of you might be asking yourself is how will digital yuan be impacting existing cryptocurrencies like Bitcoin, Ripple, or Ethereum. To answer this question we will need first to understand similarities and differences between cryptocurrencies and China`s digital yuan.
There will be many similarities between Digital Yuan and cryptos like the use of online and hardware wallets, and the use of two-key architecture to secure transactions. You can see a detailed report of similarities by Coindesk here.
But even if Cryptos and future digital yuan will share many similarities, there will be still a fundamental difference between them: Anonymity. China will be closely monitoring all digital transactions and will be trying to crack down on money laundering and illegal activity, further invading peoples privacy. On the other hands Cryptocurrencies such as BTC and Ether offer privacy and ability to transfer funds anonymously which might drive even more Chinese users to use cryptocurrencies.
Back in 2017 Chinese government has banned crypto exchanges, and they tried to crack down on bitcoin mining in 2018 as well, however, despite all that, it has still been reported by Chainalysis, a blockchain forensics firm, that just in 2020 more than $50 billion in cryptos has moved out of China.
To sum it up, people value their privacy, even in China, and more the governments try to invade our privacy, more we will be enticed to use cryptocurrencies, and according to basic economics, if demand for something rises the price follows as well.