Compared to other CBDC projects, China’s Digital Currency Electronic Payment (DCEP) initiative is arguably the most advanced out there, boasting over 6 years of development. It was bolstered further by the recent developments in the state of Shenzhen, where the government is trialing the digital yuan through a lottery-style airdrop for the state’s residents.
The citizens were asked to participate in the lottery by signing up. The whole operation was a success, with 2 million people registering between 9-11 Oct. Out of those, only 50,000 people received the lottery of 200 yuans ($30 equivalent) on 12 Oct. Unfortunately, they come with certain restrictions. It turns out that the funds can only be used on over 3300 designated shops.
The winners of the 200 yuan lottery were instructed to download the “official Digital Renminbi App” through text messages and open e-wallets, available for both popular mobile Apple and Android devices. It currently isn’t available for public download.
Digital Yuan – Plans, Usage, and Limitation
Currently, it isn’t possible to transfer these credits to another person or bank account. But that is likely to change soon since the People’s Republic of China is accelerating the digital currency program to promote the yuan as an international currency. This is the first time that the general public was asked to test it, considering that previous trials were limited to government servants.
For instance, Shenzhen’s trial only forms a small part of earlier announced plans to distribute 10 million yuan ($1.49 million) to the public. Previously, the Shenzhen government also rewarded 5,000 medical health professionals dealing with the Coronavirus digital currency handouts.
Despite the fact that China’s central bank had said that there is no timeline for the launch of the CBDC, the work is progressing fast with further trials coming up. China’s ambition is to build a new economy and a cashless society, which the CBDC can exponentially help with.
Lottery On Top Of Airdrop-Like Distribution Mechanism
The mechanism employed by the Shenzhen government eerily resembles the famed airdrop in the cryptocurrency community, where “free coins” are sent en masse to wallet addresses of different people. However, the government actually randomized the determination of who would receive the ‘tokens” by running a lottery on top of the airdrop.
As time has proved, airdrops remain popular for getting the word out and letting people know about the existence of a project. They have also proved useful with marketing and increasing adoption/usage. However, most airdropped tokens have little to no value at beginning, which isn’t the case with virtual Yuan, in this case.