The Chinese government has launched a pilot program for a digital version of the yuan.
The virtual currency ups the ante in the war on cash and creates the potential for the government to track and even control consumer spending. It also raises some concern that the Chinese could threaten dollar-dominance.
The digital currency is nothing more than a virtual banknote or coin that exists in a digital wallet on your smartphone instead of a billfold or a purse. The value of the digital currency is backed by the state, just like traditional fiat currency.