Always red, the colour of good luck, the lai see (hong bao) are often gaudily decorated with lots of gold and other bright colours. I have even seen some with colourful images of Disney characters and comical versions of ancient gods and classical figures. It is even fun to make your own with templates now readily online.
Where did this custom of giving red envelopes come from? While there is no literary evidence to prove one theory or another, I like the story that the use of the colour red comes from the time when people used to paste red paper couplets on their front doors to chase away Nien , the ferocious beast which allegedly ate people on New Year's Eve. This developed into the practice of weaving red ribbons or string around coins as "warding off evil spirits money" - often one hundred coins woven in the shape of a dragon. Then with the popularity of the printing press, this practice became red envelopes and paper money.
Whether or not our grandchildren really understand the significance of the lai see (hong bao), they do recognize that this is a Chinese tradition and part of their heritage. It is a very easy custom to maintain, and the red envelopes themselves have become a symbol of unity and continuity of culture.