A man counts 100 RMB notes with the Chinese flag in the background.
Sheldon Cooper | SOPA pictures | LightRocket via Getty Images
GUANGZHOU, China – Chinese e-commerce company JD.com announced that it will be the first online platform to accept the country’s digital currency.
The announcement on Saturday comes as part of another real-world trial for the digital yuan in Suzhou, a city about 65 miles west of Shanghai.
A total of 20 million yuan ($ 3 million) will be up for grabs in a lottery, according to a WeChat post by JD Digits, the fintech arm of JD.com. The winners will receive a so-called “red package” via an app that contains a maximum of 200 yuan of the digital currency. Hundreds of thousands of these red packages are being distributed.
Those who receive the digital yuan can spend it on JD.com’s online shopping platform.
This is not the first time China has been distributing a large portion of its digital currency. In October, residents of Shenzhen China Technology Center were given a total of 10 million yuan in a lottery.
The digital yuan, which is controlled and issued by the People’s Bank of China, is a so-called central bank digital currency (CBDC). The central bank is calling its project “Digital Currency Electronic Payment” or “DCEP”, although it is still quite excited about its development.
Central bank digital currencies are different from cryptocurrencies like Bitcoin or even the Facebook-supported digital coin scale. That’s because they are controlled and issued by a central bank.
Bitcoin, which recently hit a record price, is decentralized – that is, it is not controlled or issued by a single entity.
Central banks are looking closely at digital currencies because they promise features like more efficient cross-border payments and move countries towards cashless societies.
The BIS, a group of central banks, said earlier this year that 80% of the world’s central banks “have already started designing and exploring the potential for CBDCs”.
China’s central bank appears to be the furthest advanced in adopting a digital currency compared to other major economies, although so far it has stopped nationwide rollout and has instead focused on pilot projects.