China continues to push on with its central bank-issued digital currency trials. The latest initiative saw 50,000 citizens receive the digital yuan to use at real-world retailers.
The government of the tech hub region of Shenzhen sent out a total of almost 10 million yuan (~$1.5 million) in the latest trial of the digital yuan. The distribution was decided by way of lottery.
China’s Biggest CBDC Trial Yet?
As BeInCrypto has reported previously, China has been working on its digital currency for years now. However, recent months have seen the nation ramp up its efforts.
In August 2020, news broke that trials of the digital currency electronic payment (DCEP) system were spreading to almost 30 cities around the country. Then, earlier this month, BeInCrypto reported that the trials had processed more than $160 million worth of payments from over three million transactions. Trials included a range of payment scenarios, including bills and government levies.
The latest stage in the ongoing DCEP trial process appears to focus on consumer spending. As reported by CNBC, the Shenzhen government carried out a lottery last week to decide who would get to participate in the latest phase of trials.
Of almost two million hopeful participants, around 50,000 winners received a cut of the central bank-issued digital currency.
Those lucky enough to receive the new digital currency can download a wallet application and spend it at more than 3,000 merchants. Those businesses participating in the trial are located in a single district of the south China tech hub, Shenzhen.
Local cryptocurrency news outlet 8BTCnews tweeted video footage of one winner buying a drink with the digital renminbi. The transaction appears speedy, particularly when compared to Bitcoin payments.
— 8BTCnews (@btcinchina) October 13, 2020
A Far Cry From Bitcoin
The speed of digital yuan transfers shouldn’t come as much surprise. After all, the system relies entirely on the People’s Bank of China for issuance and transaction validation.
Whereas Bitcoin relies on a distributed network of node operators and game theory to function without central control over issuance and transaction validation, China’s digital currency strips away these revolutionary features.
With a nation’s history of citizen surveillance and authoritarian rule, the movement away from cash was always going to be about exerting greater control — a stark contrast to the ideas of financial freedom touted by most Bitcoin proponents.
China is by no means the only nation pursuing a state-issued digital currency. Many European countries and the U.S. are among the world powers currently exploring their own native electronic currencies.
The growing general popularity of cryptocurrencies and stablecoins such as USDT and USDC, appears to have hastened development efforts. Users are increasingly finding greater utility in alternatives to fiat currencies and legacy payment systems. This is forcing central banks to move with the times.
The Central Bank of the Bahamas has already penned a date for the launch of its own CBDC. The so-called ‘sand dollar’ will go into circulation gradually from Oct 20.
The archipelago nation is hoping the new digital currency will increase efficiency of payments. With many entrepreneurs scattered across its small islands, a purely digital currency may remove friction when businesses need to transfer funds.