As China charts an exit from the Coronavirus crisis it has announced a digital Yuan, the implications of which are yet to be seen. As stated by Yanis Varoufakis, a central drive for Bitcoin and other digital currencies has been an attempt to escape the politicisation of money through central banks — but money cannot be depoliticised. Knowing this, how should we approach the sovereign digital Yuan?
We can appreciate the technical aspects of digital currency by understanding the principles of asymmetric encryption. Asymmetric encryption is a form of encryption in which there are two keys. Information (in this case a currency) encrypted by one key can only be decrypted by the other key. If one key is public and the other is private this allows two things, information to be encrypted in a way that only the private key holder can decrypt (i.e. confidential transfer) and information to be encrypted in a way that it can be verified as being carried out by the holder of the private key (i.e. authentication of source).