China's Digital Fiat Wants to Compete With Bitcoin

Published on by Coindesk | Published on

A review of over 50 patent applications submitted by the People's Bank of China shows t.he design of its central bank digital currency will only resemble a cryptocurrency in limited ways.

Far from emulating the decentralized aspects of ether and bitcoin, the official emphasized the issuance of the central bank's digital currency will stick to a centralized management model.

China may be about to launch a fiat digital currency, but in all likelihood, it will only resemble a cryptocurrency on the surface.

The project was thrust into the spotlight last weekend when a senior official from the People's Bank of China said at a closed-door conference that the country's central bank digital currency is ready to launch.

To date, the lab has filed more than 50 patent applications, all either invented or co-invented by Yao, and about 20 of those focus on design specifications of a so-called digital currency wallet.

One patent application, entitled "a method and system for enquiring digital currency transaction information" filed on Dec. 28, 2017, describes a digital currency wallet that aims to bridge the gap between existing electronic wallets and "Private quasi-digital currency wallets, like that of bitcoin."

"The emergence of digital currency is an inevitable trend. So far, privately issued digital currency bears the features of anonymity and volatility. Central banks must take their impacts on the payments, monetary systems and financial stability seriously. As such, it's inevitable for central banks to push for digitized fiat currencies to optimize their circulation."

The patent application on how to apply and create digital wallets filed on Dec. 28, 2017 stated that the system lets users apply through their banks and the creation of such digital currency wallets will be registered at the issuance organization.

"A sender would authorize a payment deduction request to a receiver's digital currency wallet. The receiver would verify such request, which will then be sent to the CBDC issuance registration system. The payment will complete after the verification of such request."

"Since we are using digital fiat currency to replace M0, to reach a retail-level adoption, the first issue that we can't bypass is the demand for high-volume transactions."

x