China rolls out digital yuan wallet app for iPhone and Android

China has launched a trial run of a digital wallet app for iPhone and Android that allows users to store and pay for items or services with digital currency.

The digital yuan currency that the app supports was developed by China's Digital Currency Research Institute as a replacement for Chinese banknotes and coins, the South China Morning Post reported Tuesday.

Previously, the free e-CNY app was only available via private links, but can now be downloaded by the public. However, new registrations for the service are limited to Chinese cities that are undergoing digital yuan trials, as well as venues of the Beijing Winter Olympics.

About 140 million Chinese residents have opened a digital yuan account as of October 2021. Additionally, the service has accumulated 62 billion yuan in transactions — about $9.7 billion.

However, Chinese consumers may have few incentives to switch to the new service from current platforms like Alipay and WeChat Pay, which are highly popular in mainland China. Alipay, for example, had 1.3 billion users by July 2020.

In an effort to entice new users, Chinese officials have been giving away digital yuan through lotteries.

Digital yuan is meant to be a replacement for traditional money, but it isn't a cryptocurrency. It's not decentralized and doesn't operate on the blockchain. While it offers some level of privacy, it still allows Chinese authorities to monintor for illegal transactions.

6 Comments

GeorgeBMac 11421 comments · 8 Years

About 2 years ago

It's not IF but WHEN it will be here in full bloom. The Fed is also looking into it -- so it won't be just China.

One obvious obstacle is that everybody will need a way to keep it and use it -- even the homeless. Not everybody will have a smart phone, but debit cards could suffice. But then, how does one give a dollar to a panhandler?

Another big limitation is that they tend to rely on everybody having a bank account. But Apple seems to have solved that on a practical basis with AppleCash because once you have money in it it works like a bank account (actually there is one behind it).

But China, like the U.S. already seems to have these digital systems in place (AliPay in China and ApplePay in the U.S.). So how will these interact with each other -- or will the government version become the sole digital source?

In any event, there will be screams of anguish when cash is eliminated -- especially from the tax cheats.

GeorgeBMac 11421 comments · 8 Years

About 2 years ago

AppleInsider said:

However, Chinese consumers may have few incentives to switch to the new service from current platforms like Alipay and WeChat Pay, which are highly popular in mainland China. Alipay, for example, had 1.3 billion users by July 2020.Read on AppleInsider

China won't let a private, for-profit company stand in its way of instituting a better system.
They already stepped in with AliPay when Jack Ma was going public.

urahara 733 comments · 13 Years

About 2 years ago

I am confused. Could some one please explain to me:
- what is that digital yuan? Is it just money in the bank? How is it linked to 'normal' yuan? Or is it something like Cryptocurrency?
- what is that payment system? How is it different from WeChat, or Apple Pay, or PayPal?
I would appreciate some info on that points. Thank you. (I read the link provided on the South China Morning Post, but didn't get any better understanding).

GeorgeBMac 11421 comments · 8 Years

About 2 years ago

urahara said:

I am confused. Could some one please explain to me:
- what is that digital yuan? Is it just money in the bank? How is it linked to 'normal' yuan? Or is it something like Cryptocurrency?
- what is that payment system? How is it different from WeChat, or Apple Pay, or PayPal?
I would appreciate some info on that points. Thank you. (I read the link provided on the South China Morning Post, but didn't get any better understanding).

Same here! I haven't seen any detailed explanation either.
My understanding is that it is digital (like BitCoin -- but without its blockchain) and it is like ApplePay or AliPay (except instead of being managed by a private corporation it is managed by the government). And, it is part of the nation's official currency and managed by its central bank so it remains stable -- like the physical yuan or dollar.

I am hoping the U.S. will follow suit quickly -- I know that our Fed has been studying it.
Cash seems so obsolete.

In some ways we are already there with the Fed's Quantitative easing: A bank 'sells' a Treasury bond to the Fed and the Fed credits their account for the amount of the bond -- which they can then loan out to its customers. No cash is involved. Its all "digital". But that's a fairly contained transaction. What China is doing has a far broader scope.

Marvin 15335 comments · 18 Years

About 2 years ago

urahara said:

I am confused. Could some one please explain to me:
- what is that digital yuan? Is it just money in the bank? How is it linked to 'normal' yuan? Or is it something like Cryptocurrency?
- what is that payment system? How is it different from WeChat, or Apple Pay, or PayPal?
I would appreciate some info on that points. Thank you. (I read the link provided on the South China Morning Post, but didn't get any better understanding).

This video has some good info on how it works:

https://www.cnbc.com/video/2021/04/20/how-chinas-digital-yuan-works.html

The possibility to issue expiring currency is interesting for cases like stimulus packages as they can be distributed more quickly and they would guarantee to be used instead of saved up.

Crypto works by making coins either out of thin air in most cases or by getting computers to crunch artificial number problems to generate them so the central authority for minting new coins is rich people who control the most computing power. The authority for digital fiat is the country's central bank.

Instead of printing paper notes for a physical wallet, they provide a digital equivalent that goes into a digital wallet and can be spent using QR codes and other digital transaction systems. It says it can work without network access. I guess as long as the recipient enables network access, they can avoid the possibility of double spending/cloning wallets.

It's not a whole lot different from the likes of Paypal except the Paypal balance is guaranteed by the company. The digital Yuan wallet has notes inside.