Despite the global economic crisis and the consequences of the coronavirus pandemic, the development of China’s national cryptomone, the electronic payment of digital currency, is making steady progress. The increase in the number of large companies joining the digital yuan initiative as partners in testing and implementing the technology is clear evidence of the progress the project is making in its development.
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Meituan Dianping, the country’s largest wholesale and delivery platform, has become the latest corporation to agree to help the People’s Bank of China test and implement the initiative. The platform currently has nearly 450 million customers and about 6 million companies that use it to sell their products.
Previously, DiDi Chuxing, Uber’s Chinese counterpart with a customer base of approximately 550 million, and the Bilibili transmission platform, which is used by more than 170 million, also joined the testing of China’s national digital currency. In addition, Simon Li, founding partner of Chain Capital, revealed to Cointelegraph that DiDi will become the first private company in the world to accept payments in digital currency issued by the central bank.
What’s in it for these companies?
The People’s Bank of China began selecting the first merchants to test DCEP in April. As reported by Cointelegraph, the list reportedly included mainly retail companies, especially food and beverage companies such as Starbucks and McDonald’s.
The choice behind entities such as DiDi, Bitcoin Compass and Meituan Dianping can be explained by the fact that their users conduct transactions worth several billion dollars a day. Such volumes can significantly accelerate the popularization and therefore the adoption of a digital yuan.
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The total number of customers for the three services combined is more than one billion people located not only in China but also in Australia and several South American countries, according to statistics provided by the companies. If a global approach of this kind is implemented, DCEP could gain access on a trial basis to a large segment of users, including representatives of large companies in the world of finance. As a result, DCEP has exceptional potential to be popularized within a reasonable period of time.
In addition, these companies will gain a significant competitive advantage by being the first to introduce such a new technology into their products. As infrastructures with a large flow of daily transactions, the companies will make use of facilitating remittances in a more reliable, cheaper and faster way. Experiments have shown that, while it generally takes about 45 days to complete a full cycle of letters of credit with the involvement of buyer and seller banks in different countries, the use of blockchain can reduce the process to just one or two days.
It is not yet clear how long the trial period for the digital yuan will last. However, given that the number of larger companies in China that are getting involved with the technology is growing rapidly, it is safe to assume that the first phase of testing is underway.
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According to the information available, DCEP tests are already being conducted in four cities: Shenzhen, Suzhou, Chengdu and Xiong’an. The objective is to test theoretical reliability, system stability, functional availability, process suitability, scenario applicability and risk management. This is also the first time that regulatory authorities confirm the dynamics of the digital currency transition pilot project, as explained by Jianing Yu, president of Huobi University.
Previously, four state-owned banks, as well as a number of large companies, including Huawei and the telecommunications giants China Telecom, China Mobile and China Unicom, joined the test phase. In April, the Agricultural Bank of China also confirmed its participation in the pilot project. However, it may still be a long way from completing the tests