Recently, Shenzhen has made a big move to take the lead in launching a digital RMB pilot project. The central bank issued 10 million digital red packets together.

A total of 10 million yuan in digital red envelopes, each worth 200 yuan, were handed out in 50,000 digital red envelopes, according to Shenzhen officials. Since October 9, individuals in Shenzhen have been able to register for a lottery through the platform, and successful users can get their red envelopes authenticated after downloading a “digital RMB APP”.

Digital RMB has’ legal identity ‘like ordinary currency

As the name implies, digital RMB is a virtual form of currency, but it is different from Bitcoin, a virtual asset. It is a legal currency issued by the People’s Bank of China, with the highest effectiveness and security. Digital yuan has the same “legal identity” as cash and is used to replace some of the cash through electronic payments.

Reservations for the first batch of digital RMB red envelopes in Shenzhen will last for three days, and after registration, the system will draw lots. The red envelopes will be given out at 18:00 on October 12 and will be used for one week.

It is understood that 3,389 merchants in Luohu District of Shenzhen have completed the transformation of the digital RMB system, and the successful users can use the digital RMB red envelope consumption in all kinds of merchants who have reformed the system.

Different from WeChat, Alipay and other software, the digital RMB APP can be used directly without the need to bind a bank card. This payment method is more similar to traditional currency, and can also be used for overseas tourists, remote mountain areas and other users who cannot or are not convenient to hold a bank account.

Digital currency can be traced back, and dual offline payment technology is more secure and convenient

In August this year, the Ministry of Commerce issued the “overall plan for comprehensively deepening the innovative development of trade in services” pilot program, the first to carry out the digital RMB pilot in the Beijing-Tianjin-Hebei region, the Yangtze River Delta, the Guangdong-Hong Kong-Macao Greater Bay Area and the central and western regions where conditions are suitable. The pilot areas identified so far include Shenzhen, Suzhou, Xiongan New Area, Chengdu and future Winter Olympics scenarios.

Digital RMB and Alipay, WeChat wallet and other use scenarios are similar, the main difference is in the technical level. Hao Yi, a researcher with the Research Institute of the Bank of China, previously said that the digital yuan’s dual offline payment technology can be used to complete transactions without an Internet connection.

At the same time, digital currency also has the characteristics of traceability. The source and circulation of currency are well documented, and it can monitor the loan issuance of commercial banks.

Digital RMB has a lot of new designs in terms of security, convenience and so on:

  • Dual offline payment: like paper money, it can meet the demand of electronic payment in places with poor network signals such as airplanes, cruise ships and underground parking lots.
  • Higher security: In case of theft, digital RMB can provide loss reporting function for real-name wallets.
  • Multi-terminal choice: those who are not willing or unable to use smart phones can choose IC cards, function machines or other hardware;
  • Multi-information intensity: according to the strength of customer information, the digital RMB wallet is divided into several levels. If a large amount of payment or transfer, it must be through a real-name wallet with high information intensity;
  • Peer-to-peer delivery: Through digital currency smart contracts, point-to-person delivery can be achieved. People’s livelihood funds, can be issued to the people’s digital wallet, so as to eliminate the possibility of false report false claim, intercept embezzlement;
  • High traceability: Relevant data verification and cross-comparison are carried out under the condition that the competent authorities issue relevant legal documents in strict accordance with the procedures, so as to provide information support for cracking down on illegal crimes. Corrupt elements will be difficult to escape supervision even by means of breaking up into parts.

The digital yuan is a digital form of cash, not a virtual currency like Bitcoin. Yi Gang, governor of the People’s Bank of China, once pointed out that “there is no preset technical route for the research and development of the digital RMB, which can take into account the blockchain technology or adopt new technologies evolved on the basis of the existing electronic payment.”

In the modern society with the rapid development of digital economy, people’s demand for currency has also begun to turn to digitalization. The introduction of digital RMB will improve the security and convenience of payment.

It will be some time before the digital yuan is fully available

Digital RMB is more in line with the habits of modern consumption. It has the same consumption and circulation ability as cash. It is more secure than virtual currency and more convenient than existing payment methods.

The concept of the digital yuan has been proposed for several years, and has finally started a pilot project in Shenzhen. After a series of tests and evaluations, it may be fully promoted in the near future. Four major banks — Bank of China, Industrial and Commercial Bank of China, Agricultural Bank of China and China Construction Bank — have already supported the digital RMB conversion.

However, the distance from the official launch of digital RMB also needs a certain amount of time and practical experience. In the future, the pilot scope of digital RMB will be gradually expanded to meet the needs of consumers in the era of digital economy.