The People’s Bank Of China’s Report On Blockchain Tech And Their Upcoming CBDC
06 Diciembre 2021 - 04:38PM
NEWSBTC
Apparently, the People’s Bank Of China is considering using
blockchain technology to power the Digital Yuan CBDC. The coin,
also known as Digital renminbi or digital RMB, has been in
beta-testing for a while 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 Finance
Forum (IFF) on Dec. 5,” and Chinese journalist Colin Wu translated
the main points for us to analyze. Related Reading | How
Samsung Will Help The Bank Of Korea With CBDC Development Before we
do that, let’s consider this. Their CBDC is a completely
centralized affair. Why would the People’s Bank Of China use a
blockchain? In other words, why would China need a blockchain for
its CBDC if its aim is not decentralization or censorship
resistance? A centralized database is orders of magnitude more
efficient than a blockchain. And it doesn’t need mining to validate
transactions, nor PoW or PoS to reach consensus. Let’s dive into
the report and see if we can find answers to these questions. What
Does The People’s Bank Of China Think About Blockchain Tech? The
report begins with stats and a survey’s results: “According to Di
Gang, 2021, the results of blockchain research conducted by
relevant consulting organizations for ten countries, including the
United States, the United Kingdom, Singapore, Germany, China and
Japan, show that 81% of the institutions surveyed believe that
blockchain technology is widely scalable and is being adopted by
the mainstream, with the percentage of financial institutions
agreeing with it being as high as 84%, and all the global financial
institutions surveyed have made blockchain an an imperative
strategic priority.” Notice that they talk about belief and
about making blockchain a priority, but not about actual usage
among traditional financial institutions. The report does go on to
say that “A research institute in September 2021, research on the
use of blockchain by the global TOP 100 listed institutions shows
that 81 institutions are using blockchain technology,” but no
source is given. Where are those projects? Are they still in
development? Then, Di Gang claims: “Blockchain landing
achievements are increasing and playing more and more value
advantages; on the other hand, blockchain technology has realized
landing in cross-border payment, supply chain finance, agricultural
finance, trade finance, inclusive finance, social city, “three
rural areas”, people’s livelihood, etc.” Are these crypto-projects,
government-related, or traditional finance projects? The report
doesn’t specify, so we can’t know their characteristics. Then, Di
Gang says “Some large international financial institutions are also
actively expanding blockchain application scenarios, including
trade finance, information sharing, foreign exchange trading,
equity trading, etc.” Why do those institutions need a blockchain
to do all that? Does The Digital RMB Or Digital Yuan Need a
Blockchain? Apparently, it does. Apparently, the Numerical Research
Institute is already working on an implementation: “First, a
unified distributed ledger was built in the digital RMB system
based on blockchain technology. The central bank acts as a trusted
institution to upload the transaction data onto the chain to
guarantee the authenticity and reliability of the data, and the
operating institutions can conduct cross-institutional
reconciliation, collective maintenance of the ledger, multi-point
backup, etc.” The Institute wants to build a “blockchain platform
for trade finance, with the goal of penetratable information,
transferable trust and shareable credit, and to complete the
construction of a blockchain-based trade finance ecosystem.”
Relationship betwwen the US Dollar and the Chinese Yuan FXCM |
Source: USD/CNH on TradingView.com Technical Challenges In
Blockchain Technology The People’s Bank Of China identified the
following problems with blockchain technology: Problems with
performance and scalability. Not Enough privacy protection.
“Innovation from the theoretical level is still needed, as well as
from engineering technology,” Di Gang said. It needs to further
strengthen security technology innovation. “In terms of regulatory
auditing, Di Gang believes that there are still many nodes inside
the blockchain that are anonymized and dense, which are difficult
to supervise by decentralization,” There’s technical friction
between blockchain technology and traditional technologies. Someone
needs to build an interoperability standard system. So, essentially
the same problems every crypto company already identified plus one,
“regulatory auditing.” Is it fair to say that this is what this
report is really about? Related Reading | Central Bank of
France Tests Blockchain-Backed CBDC Targeting Debt Market The
People’s Bank Of China Will Release Their CBDC For The Winter
Olympic Games Apparently, the PBOC’s plan to further test the
Digital RMB during the Winter Olympic Games is still a go. Di Gang
said: “The digital RMB has been piloted since the end of 2019 and
is now being piloted in 10 regions and the 2022 Beijing Winter
Olympic Games scenario, and in July this year, the PBoC released
the White Paper on the Progress of R&D of China’s Digital RMB,
and as an important part of the digital RMB R&D pilot and the
Winter Olympic Games preparation, the pilot of the digital RMB
Beijing Winter Olympic Games scenario is also is advancing in a
steady and orderly manner.” And that’s where China currently stands
regarding blockchain technology and their CBDC. Featured Image:
glaborde7 on Pixabay | Charts by TradingView
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