Shenzhen to publicly test digital currency

Shenzhen, South China’s Guangdong Province, along with China’s central bank, will distribute 10 million yuan ($1.49 million) to its residents in the form of digital currency starting October 12.

This marks the first time that the test of the central bank-backed digital currency will go public from a closed internal test, an important milestone which analysts said could gauge the stability of the system that will lay the foundation for a massive launch.

Residents need to apply in advance for an online lucky draw in order to be in the running for the digital money, according to local government.

The money, seen as virtual “red packets,” will be deposited to the individual’s digital currency wallet from 6 pm on October 12.

Analysts said the new tests mean that China’s digital currency technology has become mature, but that the central bank still has to carry out scientific, standardized and strict testing.

The previous tests of the Digital Currency Electronic Payment (DCEP) were mainly carried out in banks or merchants, and on a limited scale.

The tests in Shenzhen will determine whether the system will be stable in a large number of users, and whether the user’s privacy can be protected, Wang Peng, assistant professor of the Gaoling School of Artificial Intelligence at the Renmin University of China, told the Global Times Friday.

He also noted that the tests will cover the interconnection of parties, which includes financial institutions, regulatory authorities and cooperative companies or merchants in digital currency transactions.

“It is also like an ‘advertisement’ to let the public know digital currency better, and get people used to using digital currency,” Wang said.

“It will boost consumption and roll out public tests at the same time,” he said.