The number of companies in China testing the national cryptocurrency is on the rise as the development of the CBDC continues to progress rapidly.
Digital Yuan Testing Progresses
The global economic crisis and the effects of the coronavirus pandemic have not affected the development of the Chinese central bank digital currency (CBDC). The digital Chinese national cryptocurrency, the Digital Currency Electronic Payment (DCEP), has experienced massive growth over the past few months, and more large companies in the country are joining the digital yuan initiative as partners in the testing and implementation phase. This latest development is a sign that the People’s Bank of China (CBDC) has been making progress with the creation of its digital yuan.
Recently, DiDi Chuxing, the Chinese Uber counterpart, joined the testing phase of the Chinese CBDC. The company has a client base of nearly 550 million people within the country. Streaming platform Bilibili is another company to join the testing stage of the digital yuan. According to Simon Li, founding partner of Chain Capital, DiDi is set to become the first private enterprise in the world to accept payment for services using the central bank digital currency.
What Are the Benefits for These Companies?
The People’s Bank of China has been selecting the first merchants to partake in the testing of the DCEP since April. Earlier reports show that the list contains mostly retail companies, especially those within the food and beverage industries like Starbucks and McDonald’s.
The addition of companies such as DiDi, Bilibili, and Meituan Dianping could be because the users of these companies make transactions worth billions of dollars per day. The substantial transaction volumes can help boost the popularity of the digital yuan and increase its adoption.
The entities added to the testing phase have a combined customer base of over 1 billion people. Their customers are found not only in China but in Australia and a few countries in South America. If the PBOC can deploy such a global approach, then their DCEP could gain access to a more significant segment of users and become one of the leading currencies in the world. As such, the DCEP has a good chance of becoming popular within a short period.
In addition to these, the companies will gain a competitive advantage as they will be the first to launch such new technology into their products and services. As companies that handle a massive flow of daily transactions, they would be able to utilize facilitating remittances that are cheaper, faster, and more reliable.
Currently, it is unclear how long the testing period of the digital yuan will be. However, with more Chinese companies getting involved with this new technology, it is safe to assume that the first phase of the testing process has commenced.
According to the available data, testing of the digital yuan has commenced in a variety of cities in China, Shenzhen, Suzhou, Chengdu, and Xiong’an. The primary aim of the operation is to test for theoretical reliability, process convenience, functional availability, system stability, scenario applicability, and risk management.
Top apex banks around the globe are working to develop their CBDCs as the world is transitioning to digital payment for goods and services. China has been one of the leading nations in the world in terms of CBDC development. However, other countries such as Russia, Sweden, Canada, and a few others have been making massive progress in the development of their national digital currencies. Evidently, the race is on!