In a new white paper, the People’s Bank of China describes various aspects of its national digital currency project. According to the White Paper, Digital Yuan will also support smart contracts.
to the the report China’s central bank, Crypto Briefing, has released a new white paper for its national digital currency, called the digital yuan.
The white paper says the digital version of the yuan, also known as the “e-CNY,” uses smart contracts.
According to White Paper of the People’s Bank of China, smart contracts allow automatic payments based on pre-determined terms between the parties to the contract.
Smart contracts are usually made on the Blockchain, however, the People’s Bank of China has not mentioned whether the digital yuan uses Blockchain technology.
The white paper states that the digital yuan uses technologies such as digital certification, digital signature and encrypted storage to maintain transaction security and avoid double costs.
This means that the People’s Bank of China will be the first bank to integrate smart contracts with its national digital currency. White Paper states that smart contracts should foster innovation in the business model.
In addition to smart contracts, White Paper of the People’s Bank of China states that digital yuan can be stored with a variety of tools such as hardware wallets and software based on security chips.
The document also suggests that components be added to mobile phones, wearable gadgets and Internet of Things (IoT) devices to increase the security of storage devices.
The People’s Bank of China claims to care about the protection of personal data and the privacy of transactions, and says that the digital yuan collects less information about transactions than traditional electronic payments. The bank also said that transaction data will not be shared with third parties or government entities unless there is a law in place.
These claims contradict media reports that China is likely to use the digital yuan to increase its financial oversight.
In his concluding section, White Paper discusses the anonymity of low-value transactions, as well as the ability to track high-value transactions, to ensure that large transactions comply with money laundering and tax evasion regulations.
The People’s Bank of China has been researching its national digital currency project since the formation of an executive committee in 2014.
Although China has not yet implemented the digital yuan nationally, several pilot projects have been conducted in various cities. With the release of this new white paper, the People’s Bank of China has revealed the fact that it is rapidly moving towards a large-scale implementation of the digital yuan project.
As China develops its national digital currency, so do other countries. Many countries are currently seeking the potential of national digital currencies to strengthen the global financial infrastructure and respond to the growing demand for digital currencies.
The US Federal Reserve has also recently partnered with MIT to research the design of a technological architecture for national digital currencies. However, this government institution is still hesitant to develop digital dollars.