The People’s Central Bank of China (PBoC) could be set to use smart contracts in its digital yuan project – a sign that blockchain technology could play a role. a larger-than-expected role in the future of e-CNY.
Although the Chinese government – and President Xi Jinping – have openly embraced blockchain as a growth engine, the PBoC remains adamant about the fact that the digital yuan is not built on blockchain technology. Cryptoassets, meanwhile, have been marginalized in China. Token mining has been banned, and most crypto-related activities (such as trading and payments) have been banned. A first crypto crackdown was enacted in 2017, and a second later last year.
Smart contracts are commonly used in the crypto space on blockchain networks – and allow users to buy and sell products or services using a cryptocurrency system without the need for a third party. While smart contracts are used on all types of blockchain networks, they are often associated with protocols such as Ethereum (ETH).
But while the PBoC does not accept the notion of using a decentralized network like Ethereum to build a digital CNY ecosystem, it can hope to adopt potentially useful concepts from the crypto world.
According to the China Securities Journal (via Financial Associated Press), the bank’s Digital Currency Research Institute has applied for eight patents with the phrase “smart contract” in their title.
The majority of these applications were filed last year, the media outlet noted, and most involved “fundamental technical solutions” used in smart contracts. One of the patents focuses on the “registration” smart contract and the “execution method”.
The same media quoted domestic IT and finance experts as saying that by applying smart contract technology to the digital yuan, the PBoC can hope to “expand” the “ecosystem” payment status” of the token.
They added that the smart contract-backed digital CNY will allow users to enjoy better payment “customization” and will provide a “more convenient payment tool” for users. daily.