The Chinese central bank has launched smart contract functionality for its digital yuan amid new use cases.
China recently launched smart contract functionality on its digital yuan via one of its prominent indigenous e-commerce apps, Meituan. Through this newly-enabled smart contract, users could win part of a daily monetary price ($1,312) for using the digital yuan.
China’s central bank digital currency (CBDC) received its smart contract functionality alongside newly disclosed use cases. These use cases for the digital yuan, or eCNY, include buying securities and making offline payments.
Breakdown of Digital Yuan Smart Contract Functionality & Prize Draw
When a user places an order with the Meituan app and pays for it with their eCNY wallet, this transaction triggers the smart contract. The autonomous transaction protocol then seeks out specific keywords in the list of purchased goods and searches the given merchant’s name. If the buying user procures items under the list of keywords for that particular day, they become eligible to win a prize. To stand a chance of winning, qualified users would participate in a daily draw where they could net 8,888 yuan, or $1,312.
This prize is a share of a ‘red envelope’ referred to locally as “hongbao.” The hongbao will be divvied up and shared among a certain number of draw winners. Traditionally, the hongbao term derives from small packets culturally used to gift money during Chinese New Year. This gesture is usually thought to bring good luck.
New Use Cases
Amid the digital yuan smart contract functionality development are a series of new use cases incorporated over the last few days. For instance, recent reports stated that investors could use the CBDC to acquire securities for the first time. In addition, investors could also use eCNY to procure securities on the local brokerage firm Soochow Securities mobile app.
Users can now also use the digital yuan for contactless payments via Android mobile devices. Such payments are possible even if the devices lack internet or power.
The new laudable use cases for the digital yuan should be a welcome development for the Chinese government. The East Asian nation has struggled with a low adoption rate for the CBDC since its rollout last year. At the end of 2022, the digital yuan reportedly accounted for only 0.13% of the total Chinese renminbi yuan circulation. Around this time, a former People’s Bank of China (PBoC) official also admitted that the digital yuan’s usage was low. The ex-official also described the CBDC’s adoption as highly inactive and said the results were not ideal.
Digital Yuan at the 2022 Beijing Olympics
China first tested its central bank digital currency on a large commercial scale at last year’s Beijing Olympics. At the time, the PBoC’s Digital Currency Research Director-General Mu Changchun touched on the scale of witnessed transactions, saying:
“I have rough idea that (there are) several, or a couple of million RMB (yuan) of payments every day, but I don’t have exact numbers yet.”
During the sporting event, the Chinese central bank made the digital yuan accessible to foreign athletes and fans.
Tolu is a cryptocurrency and blockchain enthusiast based in Lagos. He likes to demystify crypto stories to the bare basics so that anyone anywhere can understand without too much background knowledge.
When he’s not neck-deep in crypto stories, Tolu enjoys music, loves to sing and is an avid movie lover.
