On Monday, over 10 million yuan ($1.5 million USD) worth of China’s new national digital currency, Digital Currency Electronic Payment (DCEP), was distributed to beta testers in Shenzhen. Over 2 million people, about 15% cent of the total population of Shenzhen, signed up between Friday and Sunday to take part in the lottery, but only 2.5% were chosen to receive 200 digital yuan ($30 USD), distributed in 50,000 digital red gift envelopes. In the backdrop of Bitcoin, Libra and other blockchain projects, banks around the world are racing to issue Central Bank Digital Currencies (CBDC). But China's DCEP has been in the works for over six years. In 2014, Xiaochuan Zhou, then Governor of the People's Bank of China, established a Digital Currency Research Institute to develop cryptographic technology for the People’s Bank of China (PBoC). Their goal was to help increase the circulation of the RMB and improve its international reach, similar to the US Dollar. While the PBoC has tried to avoid using the words "crypto" or "blockchain" to describe its new digital currency, they use phrase “smart contract” frequently in its white papers. Over 80% of the world's central banks are exploring digital currencies already, and 10% have already launched betas. With roughly 80% of payments in China being made through mobile devices, compared to 17% through cash and debit cards, it's unclear what impact DCEP's lack of anonymity will have on its adoption. Based on the white papers, it appears the PBoC will be able to trace and monitor ever movement of the DCEP given its electronic footprint and centralized control.

South China Morning Post (Oct 13)