China’s digital yuan is deployed quickly and leaves dust on the streets

With each passing day, the list of countries actively exploring the idea of ​​a central bank digital currency (CBDC) continues to grow at a rapid pace. While China’s digital yuan project may be the most talked about, countries like the UK, Sweden and Japan have been pushing research and / or testing their own CBDC in recent months.

However, the digital yuan project is ahead of all its contemporaries at this point as the Chinese authorities have already completed several rounds of testing of this coin in several key regions such as Beijing, Chengdu and the Greater Hong Kong Bay.

To illustrate how far the project has actually come, reports show that Suzhou residents can now pay for their daily rides on Line 5 of the city in copper digital yuan.

A brief overview of the e-CNY. Project

Originally seen as a tool that would help China digitize its economy amid the worsening COVID-19 situation, initial reports merely stated that a group of state-owned banks in China were conducting internal tests of a digital wallet designed to that they have a “digital yuan” – called Digital Currency Electronic Payments. number or DCEP.

It quickly became clear, however, that the scope of this project would go beyond simple bank transfers, especially when confirmations of successful pilot tests emerged in large metropolitan areas such as North Jing, Xi’an New Area, Shenzhen, Suzhou and Chengdu.

As the test was conducted, authorities recently issued digital yuan – valued at around $ 6.2 million – to people residing within the city’s city limits. Basically, residents of the Chinese capital had the opportunity to register and win one of 200,000 packages worth 200 digital yuan (US $ 31.34) each.

Digital cash is distributed through an app, which various reports say is designed to enable real-time currency transactions, albeit currently safe in some retail stores. Similar CBDC raffles have also been held in many of the above destinations, which shows China’s determination to spend its digital tokens for mainstream use.

Finally, Yao Qian, former director of China’s CBDC efforts, recently noted that the vast majority of all CBDCs moving towards an increasingly digitized future will eventually (or at least initially) turn to supporting public blockchain networks like Ethereum, which suggests that There is a possibility that e-CNY will eventually become compatible with Ether (ETH).

The proof is in the pudding

China’s CBDC-related success stories are becoming more common now. Just recently, the local government in China’s Xiong’an New Area, which is just over 80 kilometers from Beijing, made its workers pay with the digital yuan. In fact, the entire region appears to have adopted the Blockchain Fund Payment Platform to help digitize their local economy.

In addition, the public transportation authorities in large Chinese cities like Chengdu are required to extend their payment settings to the digital yuan, possibly to fuel the mainstream upswing of the e-CNY.

Meanwhile, some of China’s leading retailers have also joined the trend to introduce the e-CNY. In addition, Alibaba’s online grocery services such as Ele.me, Tmall Supermarket and Hema Grocery Store have started enabling their customer departments to pay for their goods in yuan for billion users.

China’s crypto policy aims to encourage the adoption of digital CNYs

In recent years, China has taken an extremely tough stance in regulating its local cryptocurrency market. In the past few months, local authorities seem to have gone too far, as evidenced by the recent ban on cryptocurrency mining.

In the days that followed, the government also banned financial institutions, from banks to online payment providers and everyone in between, from engaging in any type of cryptocurrency transaction – including registration, trading, clearing and settlement.

Kevin Zhang, vice president of business development at Foundry, an investment firm focused on mining and staking digital assets, told Cointelegraph that he believes China and the CCP are focused on maintaining “social stability” despite Bitcoin Mining and crypto / volume finance flows are just drop in the bucket when it comes to the grand scheme of things, adding:

“It is a loud diversion that constantly calls attention to and undermines China’s control over capital flows and financial regulation. It all happened when crypto / bitcoin started to hit all-time highs and the CCP celebrated its 100th anniversary. “

Nishant Sharma, founder of BlocksBridge Consulting, an international consulting firm focused on the crypto mining industry, told Cointelegraph that China remains the largest market for cryptocurrencies like Bitcoin (BTC) outside of the United States. He added, “Since the ban on crypto exchanges in 2017, cryptocurrencies in China have been traded in a peer-to-peer fashion, and Chinese citizens continue to use cryptocurrencies like bitcoin as an investment. “

Where do other countries stand with their CBDC systems?

China’s digital currency experiment is unlikely to go unnoticed, as the Bank of Japan recently announced that it had successfully launched a year-long test of the digital yen mine. The aim of the project appears to be to assess the long-term technical / monetary viability of issuing a large-scale CBDC within the borders of Japan. The pilot project is expected to end in the first quarter of 2022.

Sweden’s central bank Riksbank has announced the results of a successful phase 1 study after months of apparent inactivity related to its e-Krone project. Likewise, since the beginning of 2021, the Bank of England has expressed a strong desire to develop its own digital currency.

Connected: CBDC Promised Land: While some governments stall, others move on

Meanwhile, countries like the Bahamas and Cambodia continued to issue their own CBDCs: Sand Dollar and Bakong, respectively. Adoption of these assets has been slow, however, an issue the People’s Bank of China (PBoC) appears to be looking at a lot to expect full implementation through initiatives and their various e-CNY airdrops.

Finally, China is taking a very unique path to adopting CBDC within its borders. Although China is very much against crypto and even crypto mining, China is still at the forefront of the CBDC race and eager to adopt the technology underlying both solutions. In the meantime, other countries will be looking carefully, but most seem to be taking a different approach to adopting a sovereign digital currency.