How to profit from the Chinese Digital Yuan?

How to profit from the Chinese Digital Yuan?



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What is the digital Yuan?

China’s new digital currency could encourage the worldwide use of the yuan. If it's any good!

The People's Bank of China, PBOC, recently announced that it will launch its own digital currency in 2020, in a move to make the Yuan a currency that can easily be used globally in transactions. China is laying the foundation for the internationalization of its Yuan.

The digital Yuan will be legitimately issued by the PBOC and commercial banks. To me, this indicates that besides 'stealing' western technology they are even copying the USD's reserve currency status' fabric. After all, the USD can be issued by the Federal Reserve Bank as well as commercial banks. Sounds familiar?

What's worse is that it will be only digital and centralized by the Chinese Government. In other words, I'm wondering whether they will track our transactions? Surely it will be used within China's borders for their social credit system that spies on its citizens 24/7.

For western countries, this is an unacceptable red line.

So how can you profit from the Chinese digital Yuan?

First of all: don't use it!

Secondly: learn more about it!

Why would we accept a digital yuan that they have created in one moment with a genesis block and a huge premine? If you want to own an asset outside of the current USD system, buy some gold, silver or some cryptocurrencies, but not the digital Yuan. The digital Yuan will not be a store of value, they will be able to expand the money supply, making your digital Yuan worth less every day.

I expect them to come out with an inflationary digital coin, that is highly centralized and subject to Chinese law.

A new western gold standard?

It is clear to me that China wants its own reserve currency and is working hard to get partners. For example, they have had long negotiations with the BRICS countries and I don't think it wasn't on the agenda.

In the United States, the elites have noticed this evolution, of course, and are breaking their heads on how to counter China's take-over attempt. One of the answers might be a return to sound money, to restore people's trust in 'money', 'governments' and 'banking'. After all, it was the banking sector that destroyed our financial system by taking unnecessary risks, investing in derivatives and other crap you couldn't give away, by enriching itself on the behalf of the people, who received the cheque for the bail-out programs.

A Bitcoin Standard?

If you understand Bitcoin, you understand it is digital gold, or gold 2.0, and isn't yet used in daily transactions. It could be the perfect backbone for the new world currency, which will eventually come. I do expect some painful transition efforts to take effect between our current fiat and one world currency, in which central banks will attempt to replace their current fiat model by CBDC-fiat models. Western or Chinese CBDC's or central bank digital currency is most likely going to be a centralized fiat model. Important is to understand that 'paper or digital fiat' is the same: they can destroy your wealth by printing or creating more.

A Ripple Standard?

Most hated among bitcoin maximalists is Ripple, a new concept, but one made for the banking sector. Instead of using the blockchain mining concept, Ripple uses a unique distributed consensus mechanism through a network of servers to validate transactions. This product addresses the current liquidity problems withing our monetary system, where SWIFT transactions take too much time, leaving much-needed velocity of money low, due to parked money. Similar to bitcoin, Ripple claims to be decentralized and yet faster and reliable.

My thoughts on Ripple are that the banks will surely not give up their revenue models and are likely to adopt a technology that is coded exactly for them. When you read up on XRP, you'll be surprised about the adoption growth of this already used product.

The invisible war.

Clearly the reasons for a change within our current financial architecture or even New World Order are ramping up. Both the USA and China are going to make their claims, whereas the USA tries to defend its empire and the US dollar reserve currency status and China tries to replace it.

Since China might not back its currency with oil, but with gold and Bitcoin, this leaves the question of whether the USA can even protect the USD by being present in the Middle East. I read reports about China attempting to bypass the oil-problem completely and focus on a new standard, one without oil. I think we must look to technology: China aims to become the world leader in several key industries like the pharmaceutical, automotive, aerospace and semiconductor industries as well as IT and robotics.

Trump's massive stimulus into the military-industrial complex might become one of the worst investments in the history of the USA, as I believe infrastructure projects and jobs are much more needed.

In order to maintain economic growth, standards of living, and meeting the demand of its increasingly educated workforce, China needs to lift the game on its economic and technological competitiveness. With the 'One Belt, One Road'-vision, China might become an empire without military interventionism.

I leave you with some thoughts:


So how to profit from the digital Yuan?

I could argue that you should look at the big picture and understand that no empire survives, not even the USA. The Romans failed, the British did and so will the USA. History often repeats itself, I hope it will not be a transition that leads to a military conflict between two superpowers, but it could.

Although investing in this new digital yuan might not be ideal for western people, there will be other offers on the table. One of the opportunities are cryptocurrencies, a brand new asset class after 300 years of relentless.


Specialized in monetary economics and history, gold standards and cryptocurrencies' potential for a new financial system, I offer a much needed background for investors.


In this blog I will offer insights in the history of central banking, the goldstandard, fiat currencies, blockchain, Bitcoin and lots more, all in an effort to explain these subjects in a for normal people understandable language.

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