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Apparently, the People’s Bank of China is considering using blockchain technology to operate the CBDC with the digital yuan. Coin also known as digital yuanhas been in beta testing for some time now. However, Di Gang, deputy director of the Digital Currency Institute of the People’s Bank of China, recently presented an extensive report on blockchain technology. It was at the “18th Annual Global Meeting of the International Financial Forum (IFF) on December 5th,” and Chinese journalist Colin Wu shared the highlights for analysis.
Their CBDC is a completely centralized business. Why would the People’s Bank of China use blockchain? In other words, why does China need a blockchain for CBDCif its goal is not decentralization or censorship resistance? A centralized database is several orders of magnitude more efficient than a blockchain. And it doesn’t need mining to verify transactions, nor PoW or PoS to reach consensus. Let’s dive deeper into the report and see if we can find answers to these questions.
What does the People’s Bank of China think about blockchain technology?
The report starts with statistics and survey results:
“According to Dee Gang, in 2021, the results of a blockchain study conducted by relevant consulting organizations in ten countries, including the US, UK, Singapore, Germany, China and Japan, show that 81% of institutions surveyed believe blockchain technology is widely scalable and widely adopted. circle of people, while the percentage of financial institutions that agree with it reaches 84%, and all surveyed global financial institutions have made blockchain their urgent strategic priority. ”
Note that they are talking about faith and making blockchain a priority, not actual use by traditional financial institutions. The report states that “a research institute conducted in September 2021, a study of blockchain use in TOP-100 global organizations, shows that 81 institutions are using blockchain technology,” but the source is not provided. Where are these projects? Are they still in development?
Then Di Gang states:
“Advances in blockchain landing are growing and have more and more benefits; on the other hand, blockchain technology has found applications in cross-border payments, supply chain finance, agricultural finance, trade finance, inclusive finance, social city, ‘three rural areas’, people’s livelihoods, etc. “
Are they crypto projects, government or traditional financial projects? It is not specified in the report, so we cannot find out their characteristics. Then Di Gang says, “Some large international financial institutions are also actively expanding blockchain use cases, including trade finance, information exchange, foreign exchange trading, stock trading, and more.” Why do these institutions need blockchain for all this?
Does the digital yuan need a blockchain?
Apparently, yes. Apparently, the Institute for Numerical Research is already working on implementing:
“First, a single distributed ledger was built in the RMB digital system based on blockchain technology. The central bank acts as a trusted institution to upload transaction data onto the chain to ensure the authenticity and reliability of the data, and the operating institutions can conduct inter-agency reconciliation, collective ledger maintenance, multi-point backups, etc. “
Technical problems in blockchain technology
The People’s Bank of China has identified the following problems with blockchain technology:
- Performance and scalability issues.
- Insufficient privacy protection. “Theoretical innovation is still needed, as well as engineering technology,” said Di Gang.
- Innovation in safety technology needs to be further strengthened.
- In terms of regulatory auditing, Di Gang believes that there are still many nodes inside the blockchain that are anonymous and difficult to control through decentralization.
- There are technical issues between blockchain technology and traditional technologies.
People’s Bank of China to release its CBDC for the Winter Olympics
It appears that the plan to further test the digital yuan during the Olympic Winter Games has yet to be realized. Di Gang said:
“The digital yuan has been tested since the end of 2019 and is currently being tested in 10 regions. The RMB digital script pilot for the Beijing Winter Olympics is also progressing steadily and orderly. ”
And this is what China is currently doing in regards to blockchain technology and their CBDCs.
Author: Anton Zaitsev, analyst Freedman Сlub Crypto News
#Peoples #Bank #China #report #blockchain #technology #CBDCs
