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China is scheduled for another test trial for its digital currency. The country had previously offered millions of digital yuan in a lottery during its biggest public test.
Today, it has been reported that China would give way the country’s central bank digital currency (CBDC) – digital yuan – in a second lottery to be held in another city next month. According to the news, the giveaway, designed to gauge digital yuan’s usability, will be held in the city of Suzhou during the “Double 12” shopping festival on December 12.
Similar to in October trial held in Shenzhen, residents will have to apply for a 200 yuan share of the 10 million CBDC units. NFC (near-field communication) point-of-sales tech and QR code capabilities have already been mounted Xiangcheng district of Suzhou to facilitate the process.
Millions Digital Yuan Given Away in Shenzhen’s Lottery
Early last month, the city of Shenzhen decided to give away a total of 10 million yuan of China’s new digital currency via a lottery. South China Morning Post reported at that time that China sought to test out its digital currency and stimulate its usage. In the lottery, applicants were almost 2 million people, but those won were just 50,000 people.
To receive the digital yuan, winners were required to download a digital renminbi app, which eventually enables them to spend the currency in more than 3,000 merchants situated around the south China technology hub. Unfortunately, users would not be able to move or transfer the funds into their regular bank accounts.
Shenzhen government post revealed that the participating merchants were Local supermarkets and pharmacies and other retail giants like Walmart. During the week-long campaign, wallet users were required to scan the QR code that stores in Shenzhen posted so as to make payments for their purchases.
DCEP Trials Have Been Successful
China’s digital currency is not like Bitcoin, which is decentralized and therefore not owned or controlled by any Central Bank. The digital yuan helps banks to better track and analyze non-performing assets, thereby enabling them to increase financial efficiency and transparency.
Although China’s Digital Currency Electronic Payment (DCEP) plan has been work-in-progress for the past few years, only a handful of trials were carried in the country, with Shenzhen pilot being the biggest so far. In a series of test programs held over the last 12 months, over a billion yuan worth of new currency has been used in various transactions. With the biggest real-world trials for its virtual currency being carried out, China has been pushing towards creating a cashless society.
Digital yuan should not be mistaken to be a cryptocurrency, rather it is a central bank, issued digital version of China’s physical currency meant not to replace, but to supplement, third-party payments apps such as WeChat Pay and Alipay. People’s Bank of China (PBoC) might intend to use the digital yuan to keep in check the growth of Alipay and WeChat Pay, according to some industry watchers.
Digital Currency Is Beneficial to Commercial Banks
An increase in cash deposits is not the only digital yuan’s benefit for China’s commercial banks as there is a large user base provided in which they can analyze their online transaction behavior.
Foreigners will be able to purchase commodities as well as transfer funds across borders with the virtual currency, blockchain infrastructure firm PlatOn’s chief economist Huanwei Zou said. “The digital yuan will definitely change the market structure of digital payment in terms of the last-mile adoption,” he explained. While four major commercial banks have incorporated the digital yuan account in mobile apps, the central bank is yet to permit Alipay and WeChat Pay to integrate the digital yuan in their payment option.
Early this month, Coinspeaker reported that David Roche believes that China’s digital yuan had “a long way” to travel before maturing.
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James Lovett is a talented crypto enthusiast who finds pleasure in sharing more knowledge on fintech, cryptocurrency as well as blockchain and frontier technologies. He likes to keep himself furnished and updated with the latest innovation in the crypto industry, blockchain technology, Internet of Things (IoT) and other technologies. As a result, he tries to furnish ardent crypto supporters with the latest news on blockchain and distributed-ledger technologies. Indeed, Blockchain and Cryptocurrency is changing the world as we know “one block at a time”. As a hobby, he also trades in small amounts of cryptos every now and then.
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