Chinese online retailer JD recently began accepting it as a payment method as the government trials its use by giving citizens up to $3 million worth.
Many are speculating that this new currency will have global ramifications, with Facebook's Libra executive David Marcus noting that China will create a digital currency system that can be entirely out of reach for US authorities, meaning America's financial sanctions would have little effect.
He added that if the digital yuan gets widely adopted across the world, many countries could opt for renminbi as an alternative to the dollar for international clearing and settlement services.
So, what is a 'digital currency' all about and how does it work?
But even more striking to international observers than the implications for personal use is the potential geopolitical impact it could have.
The emergence of a digital yuan, as opposed to the standard yuan, is an international game-changer. As the first currency of its kind, China has the potential to pioneer it as a new global standard in its own transactions and, by using the country's economic muscle, persuade other countries and financial institutions to use it, too.
The potential outcome is clear:
At present, the dollar is the hegemonic currency of the world. It is the preferred medium of transaction for many sectors and commodities alike, not least in the realm of finance.
Due to its widespread use and the dominance of American financial institutions, the US government has the power to weaponize the dollar as a form of 'extraterritorial jurisdiction' against countries that it doesn't like.
If the US sanctions a company or individual, it effectively cuts them off from the global financial system. The banks who serve these individuals rely on the dollar, and thus face penalties if they violate the sanctions.
This is irrespective of politics...
This demonstrates the global strength of the dollar, but also shows how the digital yuan may change the current landscape.
This will reduce its global reach...
For countries like Iran and Venezuela, heavily targeted by US sanctions, it is an obvious way out.
Of course, such a system will be met with a mixed response throughout the world.
And so arguably, the rise of the digital yuan will prove to be an innovation which will truly hasten a multipolar world.
It has the potential to effectively break the monopoly of the dollar as a unilateral, extraterritorial weapon and rewrite the rules of the global financial system in a way which will be shaped by China.
It could set off a digital currency race with many other major powers too, fragmenting the existing order whereby the US dollar serves as the underbelly of all things.
The cashless, digital revolution is on its way, and while the West has so far failed to come up with any comparable scheme of its own, China's is almost at the finish line already...