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You can now spend China's cryptocurrency at online stores

Bitcoin
(Image credit: Shutterstock / REDPIXEL.PL)

Chinese retailer JD.com has announced that it will become the country’s first online store to accept the digital yuan, the state-backed cryptocurrency that has been in development over the last few years. The adoption of the currency will come into force later this month as part of a pilot program exploring the facilitation of central bank authorized cryptocurrencies.

The fintech arm of JD.com, JD Digits, will issue around 20 million digital yuan ($3 million) in total as part of a lottery for residents of the city of Suzhou. Winners will receive a “red packet” via a mobile app that contains 200 yuan of the digital currency that can then be spent through JD.com’s online shopping portal.

This is not the first time that China has conducted a trial of this nature. Back in October, 10 million digital yuan was gifted to Shenzhen citizens as part of a lottery, which could then be spent at more than 3,000 outlets within a particular district of the city.

Tests underway

China has reportedly been working on its digital yuan currency since 2014, but little was known about the proposal until last year. Now that trials are underway, some more details are emerging regarding the currency.

Unlike true cryptocurrencies, the most well-known of which is bitcoin, the digital yuan will not be based on the distributed ledger technology blockchain and will have its value stabilized against the yuan.

China is not the only country looking to offer its own state-backed digital currency. Many central banks are exploring ways of launching their own stable coins in an effort to ward off competition from decentralized cryptocurrencies like bitcoin, as well as privately run offerings such as the Facebook-backed Libra project.

Via Bloomberg