Alibaba’s patent for the e-RMB wallet
As early as December 2019, major state-owned commercial banks and telecommunication companies participated in the DCEP pilot project led by PBOC. Furthermore, financial tech giants Alibaba and Tencent have also joined in crafting the implementation of the said project. According to a report, both companies will first receive the Chinese government cryptocurrency. Other recipients also include the Industrial and Commercial Bank of China (ICBC), Bank of China (BOC), and Union Pay.
Read our previous article on China’s New Cryptography Law and Its Impact on Businesses
From February 21, 2020, to March 17, 2020, Alibaba group’s Alipay Information Technology Co. Ltd. has published five patents related to DCEP. The said patents reveal important aspects involved in the implementation of the digital wallet.
The list below shows the five patents formulated by Alipay.
- Execution method for the issuance of digital currency;
- Method and device for recording transactions;
- Account control method to handle and supervise illegal accounts;
- Method to open the digital wallet and;
- Support for anonymous trading.
Daily life payment service
Like Wechat Pay and Alipay wallet, the DCEP initiative intends to provide online users with real payment services ranging from transportation, education, food, and medical services. The trial tests focused on the use of digital currency to pay travel subsidies in Suzhou and food and retail fees in Xiong’an. The Central Bank has initially rolled out the digital money to enable the payments of Communist Party fees and government officials’ wages.
Meanwhile, screenshots of the supposed e-RMB wallet which made rounds in Chinese social media triggered various reports on the release of the said currency.
Screenshot of e-RMB
Source: South China Morning Post
The interface of the DCEP wallet
Source: Toshi Times
Matthew Graham, chief executive of Sino Global Capital based in China also posted a DCEP thread containing screenshots of the reported e-RMB wallet. The said post listed several functions and applications of the DCEP wallet interface. This was captured from a test run made with the Agricultural Bank of China.
Battle of digital currency: China’s e-RMB vs. Facebook’s Libra
China’s new electronic currency payment system is no doubt congruent with the Facebook-backed virtual currency called Libra. In 2019, Facebook revealed its plan to create a new global financial system that relies on cryptocurrency. However, the social networking giant recently announced that its Libra cryptocurrency project will undergo significant changes. After considering persistent criticisms against cryptocurrency, Facebook decided to create a traditional payment network like PayPal.
On the other hand, China released its DCEP pilot project a few days after Facebook scaled back from its former target. The country’s chief executive President Xi Jinping has stressed the importance of accelerating the development of blockchain technology. Hence, Xi hinted on cryptocurrency as part of China’s efforts to digitalize its national economy. The Chinese leader also advocated for new policies related to the development of blockchain technology as well as an Artificial Intelligence (AI) plan.
Also, check out: Beyond Digital – AI, Blockchain & Pilot Zones in China
Innovative blockchain plans such as the use of China’s e-RMB or Facebook’s Libra do not only indicate a new way of doing business. For many speculators, both digital currency initiatives signify a battle of two world power currencies, where one dominant currency is challenged by another.
Blockchain technology and the COVID-19 crisis
The connection between blockchain technology and the current COVID-19 pandemic could not be more relevant these days. Since governments across the globe have forced people to stay home to combat the spread of the virus, the push for digital currency is once again put into place.
The COVID-19 pandemic manifests what digital money can do in helping people survive such a crisis. Electronic payments make it easier for people to receive financial aid as well as make online purchases. Moreover, people can also avoid physical contact from handing out cash payments. Thus, the pandemic is leading people to a more digitalized way of life.
To note, ordinary citizens are not the only ones who can benefit from electronic currency. Companies can also use it as a payment alternative for doing trade. Hence, digital currencies may also facilitate global trade in the future.
The test version of the DCEP wallet gives a glimpse of China’s continued development of blockchain technology. However, China’s central bank reiterated that the official launch of e-RMB has yet to come. It has also insisted that the tests and trials will be held confidentially until an official timetable is announced.
China’s latest financial experiment implies a strategy to standardize and protect its monetary system. It also offers the means to reshape its national economy into a digital landscape. China plans to gradually issue the DC electronic payment system in time for the Winter Olympics. According to reports, the country is aggressively recruiting more tech talents to fast-track completion. Thus, it is only a matter of time before China unveils the full capacity of the digital yuan.