China is at the forefront of the digital economy war, and in the latest, Shenzhen city is giving away millions in digital yuan to its citizens. Media reports from China inform that the cryptocurrency is being distributed through a lottery-based system with a total worth of $1.47 million or ten million Yuan.
The lottery offers about fifty thousand gifts dubbed the “red packets,” where each gift pack contains about $30 worth of the un-named cryptocurrency. The application process is streamlined through the Shenzhen application built on a government-backed and operated blockchain network.
An official mobile application has also been launched, dubbed the Digital Renminbi, offering a cryptocurrency wallet and exchange. The scheme comes with a time limit where winners can transfer their funds to their bank accounts by the 18th of October, 2020. Unused digital Yuan, as experts believe, would roll back to the Chinese government.
China attempting to improve Digital Yuan adaptability?
The lottery’s very nature leads the experts to believe that this is a test study for the upcoming digital yuan launch. With this exercise, the Chinese government aims to quantify the current spending capacity, interest in the digital currency, and the stability of the system, dubbed the Digital Currency Electronic Payment (DCEP).
Chinese experts have been working towards the digital Yuan launch since late last year, and the government aims to roll out the currency in 2020. Reportedly, the Shenzhen program is not the only pilot test but rather among the series conducted in Ziongan, Chengdu, and other cities.
In the post-COVID-19 scenario, both China and the United States are considering a central bank digital currency (CBDC). China is leading this race with swift and quick developments throughout the year, while the United States focuses on curbing the existing cryptocurrencies.
The digital Yuan, backed by the People’s Bank of China, aims to provide a cashless alternate to Yuan. Like every other CBDC, where it provides some security sense, it also limits user privacy since all transactions are tracked to the originating point and owners.