Chinese Central Bank Consider Issuing Own Digital Coin

CBDC (central bank's digital currency) can be build without blockchain
26 January 2018   182

The Central Bank of China is considering issuing its own digital currency, maybe even not blockchain based. This is reported by CoinDesk.

Vice chairman of the People's Bank of China, Fan Yifei, spoke on the early plans of the department for the development of the digital currency.

He said that their currency would differ significantly from those that are decentralized, while centralization and control over emissions will remain the main priorities.

CBDC (central bank's digital currency) will still be the central bank's liability to the public. The nature of this liability will not change just because of the physical form of cash going digitalized. Therefore, we must ensure the central role of PBoC in issuing CBDC. A CBDC will also help curb the public's demand for private cryptocurrencies, which will strengthen the role of our sovereign currency.

Fan Yifei

Vice chairman, People's Bank of China

He also noted that the digital currency will not necessarily be operation on blockchain as most cryptocurrencies, which, for the most part, makes them anonymous. The central bank will be able to follow the transactions made with the help of the state digital currency, which will not allow it to be used for money laundering and other illegal activities.

In addition, the central bank will be cautious about the implementation of smart contracts that can automate processes using its digital currency. Since this currency will in fact become the equivalent of the yuan in digital form, then it will be subject to the same requirements that govern the circulation of the country's currency.

At the moment, according to the Chinese laws, the yuan can be used only for setting prices, circulation, calculations and storage. The same functions will be vested in the digital currency. Fan explained that the use of smart contracts can allow, for example, to automate the process of collecting taxes and raising funds, but this will be considered a violation of existing laws.

Bank of China Filed a Patent to Scale Blockchain Systems

Bank of China has filed a patent application for a process able to scale blockchain systems  
23 February 2018   95

According to a document released by China's State Intellectual Property Office (SIPO) on February 23, the application was invented by Zhao Shuxiang and first submitted on September 28 last year.

The application states that instead of letting a new block store transactions from its previous one, a data compressing system could be used to pack transactions from multiple blocks into what the patent calls a "data block."

For example, when the system receives a request to compress transactions from block 1 to 1,000, it causes a new data block to be formed and temporarily hosted on a different storage system. Then, the system will run the packed data through a hash function with a hash value. After that, the compression system will attach labels in order to identify blocks on the blockchain.

With the use of the described method, the patent claims a reduction in the amount of the data stored in new blocks as transactions mount in a blockchain while ensuring that data from all previous transactions will still be tamper-proof and traceable.

At the moment, the patent in the review process.