PetroChina, the largest oil and gas company in China, has announced that it has successfully completed its first settlement using the digital yuan, the central bank digital currency (CBDC) issued by the People’s Bank of China (PBOC).
According to a press release on October 25, PetroChina’s Guangdong branch used the digital yuan to pay for a shipment of liquefied natural gas (LNG) from its Yunnan branch. The transaction was facilitated by the Industrial and Commercial Bank of China (ICBC), one of the designated banks for the digital yuan pilot program.
The press release stated that the use of the digital yuan for cross-regional settlement can improve the efficiency and security of payment, reduce transaction costs and risks, and enhance the transparency and traceability of funds.
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PetroChina is not the only state-owned enterprise that has participated in the digital yuan trials. Earlier this month, China Southern Power Grid, the largest power grid operator in China, also announced that it had completed its first digital yuan settlement with a supplier.
The digital yuan, also known as e-CNY or DC/EP (digital currency/electronic payment), is a CBDC that aims to replace some of the cash in circulation and enhance the efficiency and inclusiveness of the payment system. The PBOC has been conducting extensive tests of the digital yuan in various cities and scenarios since last year, involving millions of users and merchants.
The PBOC has repeatedly stressed that the digital yuan is not intended to compete with or replace existing payment platforms such as Alipay and WeChat Pay, but rather to complement them and provide a backup option. The PBOC has also said that the digital yuan will respect user privacy and data security, while complying with anti-money laundering and counter-terrorism financing regulations.
The digital yuan is one of the most advanced CBDCs in the world, as China has been actively exploring and developing its digital currency since 2014. Other countries that are also working on their own CBDCs include Sweden, Japan, France, Canada, and Singapore.
Unlike Bitcoin, which is a decentralized cryptocurrency that operates on a peer-to-peer network without any central authority or intermediary, the digital yuan is a centralized CBDC that is issued and controlled by the PBOC. The PBOC can monitor and adjust the supply and circulation of the digital yuan according to its monetary policy objectives.
The digital yuan also differs from Bitcoin in terms of scalability, speed, cost, and energy consumption. The digital yuan can handle millions of transactions per second, while Bitcoin can only process about seven transactions per second. The digital yuan transactions are also faster, cheaper, and more environmentally friendly than Bitcoin transactions.
The digital yuan is different from other cryptocurrencies in several aspects. Some of the main differences are:
The digital yuan is a centralized CBDC that is issued and controlled by the PBOC, while most cryptocurrencies are decentralized and operate on a distributed ledger technology (DLT) such as blockchain. The digital yuan is backed by the sovereign credit of China and has legal tender status, while most cryptocurrencies are not backed by any entity or authority and have no legal status.
The digital yuan is designed to be compatible with existing payment systems and platforms, while most cryptocurrencies require special wallets and applications to use. The digital yuan can handle millions of transactions per second, while most cryptocurrencies have limited scalability and speed due to their DLT design.
The digital yuan transactions are faster, cheaper, and more environmentally friendly than most cryptocurrency transactions, as they do not require complex cryptographic computations or verification processes.