Digital Yuan Gets Smart Contracts, Additional Functionalities
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The Chinese government has been working on its digital yuan for over two years now. And as Beijing continues to make progress on this innovative asset, the government appears to be adding more functionality as time goes by.
Red Envelopes for the New Year
This week, local cryptocurrency news outlet 8BTC reported that the digital yuan – China’s central bank digital currency (CBDC) project – has received a fresh batch of updates that will provide smart contract functionality and other fresh use cases.
The news source confirmed that the smart contract function is the hallmark of this fresh batch of updates, citing sources following the launch of the new CBDC on Meituan – a local internet giant focusing on offering food delivery and retail services.
8BTC explained that when Meituan users place an order on the platform and process their payments using the digital yuan, a smart contract is triggered that searches for keywords and the user’s purchased items. If the user enters any of the keywords already loaded onto the asset’s list, they are entered into a draw with the possibility of winning a prize.
The prize in question is a share of a “red envelope,” known locally as hongbao. The wallets are traditionally employed as a means of gifting money around the Chinese New Year and other notable celebrations in the country as a gesture of good luck. And with digital payments growing as a means of money transfer in China, platforms such as Alipay and WeChat Pay have also embraced seemingly digital versions.
In the case of the digital yuan, each red envelope is reported to contain about 8,888 yuan – a little over $1,300, according to the current exchange rates. With the Chinese New Year now set for January 22, it’s understandable that Beijing would want to use this as a backdrop for more testing on the CBDC platform.
CBDC Development Team Scrambling for Users
Besides the delivery of red envelopes, China’s CBDC project has also seen some additional use cases in recent times. According to a recent report from the China Securities Journal, the asset has been employed in the trade of financial securities. The report explained that investors could trade securities with the digital yuan going forward, thanks to a partnership with local brokerage firm Soochow Securities.
The asset’s wallet app also recently got an update that allows users to process contactless payments with their Android devices. As a separate local report explains, these payments are also available for devices without internet connections or power. This functionality will make the digital yuan more functional even in emergencies, with users now able to easily hop on the platform to process transactions whenever needed.
Although it hasn’t been admitted, the introduction of new features was a direct response to the Chinese government’s displeasure about low adoption rates for the digital yuan. A few days before the start of the year, Xie Ping, a former PBOC research director and current finance professor at Tsinghua University, claimed that the adoption rates for the digital yuan have so far been lackluster.
Per a report from Caixin, the former government official claimed that the digital yuan had crossed $14 billion two years following its first launch. He added that only 261 million people had registered for a digital yuan wallet, just a fraction of the country’s reported population of 1.4 billion people.
As Ping explained, those numbers aren’t ideal. Now, it seems that the government could be putting pressure on the asset’s development team to add more functionalities in order to spur more adoption.