China has been championing a digital currency, established and controlled by its Central Bank for many years. The digital Yuan has been in operation in major cities across China, backed by Yuan deposits held by the Chinese Central bank and selected commercial banks. The digital Yuan is the virtual version of China's national currency, serving as a legal tender. If you're interested in trading Digital Yuan, look into websites like Yuan Pay Group.

How Digital Yuan Differs from Yuan
How Digital Yuan Differs from Yuan Pixabay

While the digital Yuan and Yuan are state-sponsored currencies, they have unique differences. The following article explores how the digital Yuan differs from Yuan.

Physical Properties

Like other local currencies such as the USD, Yuan is a form of fiat currency available in various denominations in paper and coins. Users can hold, touch and feel the Yuan in their hands. However, the digital Yuan has no physical properties since it only exists virtually. You cannot handle or hold digital Yuan. Instead, users have digital wallets for storing the private keys to their funds. All digital Yuan transactions occur online through the stipulated Chinese banks. Nevertheless, the digital Yuan is a legal tender that can pay for goods and services like Yuan.

Accessibility

Yuan is China's national currency, but it is readily available for use across the globe. It works in different parts of the world as a means of payment and a store of value. Anyone can exchange their local currencies for Yuan at banks and stock markets worldwide. Even leading crypto exchange platforms allow traders to buy crypto assets with Yuan. However, the digital Yuan's accessibility and usage have much greater restrictions.

The digital Yuan pay app is only available in selected 21 cities across China and in the Chinese language. Besides, the digital Yuan is a centralized cryptocurrency that users can only access through 7 commercial banks and two online banks in China. Signing up for the digital Yuan pay app requires users to provide copies of their Chinese IDs. Such provisions make the digital Yuan more restricted than Yuan.

Transaction Costs

Transaction costs are also essential to consider when comparing digital Yuan with Yuan. The digital Yuan is a relatively low-cost means of payment than its fiat counterpart. That is because all its transactions are digitized, eliminating the various fees levied by banks and money processors. It enables even the unbanked populations to participate in the mainstream economy without going through third parties.

On the other hand, Yuan transactions usually involve a lot of paperwork and intermediaries, driving the costs much higher. The involvement of multiple parties in Yuan international payments impacts relatively substantial transaction fees. Digital Yuan enables users to send and receive payments worldwide without intermediaries. However, the transactions are subject to the Chinese Central Bank's controls and regulations.

Anonymity

The digital Yuan is a cryptocurrency, making enthusiasts believe it is anonymous. However, digital Yuan transactions are much easier to track than other virtual currencies such as Bitcoin. That is because it has a centralized system, with the Chinese government monitoring its supply and circulation. Digital Yuan's online-based transactions enable the government to follow the flow of money across its economy easily.

On the other hand, Yuan is the most dominant means of payment in China but tracking cash is extremely difficult. While cryptocurrencies promise high-level anonymity and privacy, the digital Yuan does not have such guarantees. Some experts argue that using money in Yuan could offer more anonymity than digital Yuan as the latter is easily traceable.

In a nutshell, the government recognizes the digital Yuan and Yuan as legal tender in China. However, they vary in terms of accessibility, properties, and levels of anonymity.