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Blockchain technology and the development of central bank digital currency

Time : 07/09/2021 Author : p6ogdr Click : + -
        The year 2020 will be remembered by history. While the new coronavirus pneumonia has a great impact on the production, economy and trade of China and other countries in the world, it has also changed people's life and consumption habits to a certain extent. More and more people are forced to choose or actively choose online trading. Digital currency not only caters to the needs of business development on the home line of the epidemic, but also can realize contactless transaction and eliminate the possibility of virus transmission using paper money as a carrier. The epidemic sweeping the world may become a catalyst for the major central banks in the world to develop digital currencies. The application space of blockchain technology is wide. As a comprehensive technical framework, it has derived a variety of types of technical structures, such as pow, POS, dpos and cbft from the consensus algorithm, public chain, alliance chain and private chain from the degree of openness, ccxo model and account model from the underlying model, blockchain and DAG and cross chain and side chain technologies from the underlying ledger.
 
        The wide application of artificial intelligence and the innovative development of big data have led to profound changes in the global financial ecology. Digital currency will become a key field of international financial competition in the 21st century. The issuance of the central bank's digital currency has high requirements for technology. The blockchain technology, which has the technical advantages of decentralized distributed database, smart contract and consensus algorithm, has become the key alternative technology for the technical foundation of the central bank's issuance of digital currency. The decentralized, cryptographic encryption performance, traceability and other characteristics of the blockchain technology have obvious advantages in the credit security, transaction security and prevention of economic crimes of the central bank's digital currency, which greatly promotes the development of the central bank's digital currency.
 
        Although various countries have made continuous progress in the research of blockchain technology, there is still a lot of room for the development of blockchain technology. There are not only legal and regulatory problems in the implementation of blockchain technology, but also some contradictions between the central bank's demand for centralized management of digital currency and the decentralized characteristics of blockchain technology. The development and improvement of blockchain technology is of great significance to the research, development and layout of digital currency by central banks of various countries. Blockchain technology is a technology that supports bitcoin when the term bitcoin was first proposed in 2008, and later became a trading ledger of digital currency. The basic features of the blockchain mainly include data tamperability, openness and transparency, programmability and decentralization, and the elimination of a single point of failure.
 
        We can understand the blockchain as a technical solution. In the database technology with this feature, every person who does not know each other or does not know each other can join a transparent and open database. In the database, the traditional central ledger is no longer needed, and the credit consensus between people can be reached through point-to-point accounting, data transmission, authentication or contract. All the transaction records, data and other related information of people in the past are distributed and stored in this database, and all the information is transparent and searchable. The blocks are connected by means of cryptographic protocols to ensure that the information stored in them cannot be illegally usurped.
 
        The core technologies of blockchain currency mainly include disintermediated P2P dynamic networking, asymmetric encryption technology that uses public and private keys at the same time, distributed consensus algorithm that establishes trust in a de trust environment, and flexible smart contracts. It has been 12 years since the emergence and development of blockchain technology. At this stage, we have entered the blockchain 3.0 era where blockchain value is widely used. With the continuous deepening of research on blockchain technology in various countries, the technical advantages of blockchain are gradually explored and developed, and the application fields are also expanding. Nowadays, the application of blockchain is not limited to finance, but has been popularized in many fields, such as education reform, government data sharing, distributed energy trading, cases handled by judicial institutions, traceability of fresh product information, real estate industry and protection of intellectual property rights.
 
        As for this important cutting-edge technology, countries and international organizations in the world dare not relax their research and layout. In 2016, China began to incorporate the blockchain into the basic research and development of new technologies and began to lay out the blockchain. In 2019, based on the principle of technology neutrality, China encouraged the innovation and development of blockchain technology on the basis of rectifying the blockchain industry, and guided the integration of blockchain technology and the real economy. Blockchain has officially become a national strategy. While encouraging the innovative development of blockchain technology, China emphasizes to continue to do a good job in the supervision and development of blockchain technology. The state and local governments have successively issued many policies to increase support for blockchain and laws and regulations to strengthen the supervision of blockchain.
 
        Many countries in the world also attach great importance to the development of blockchain. The United States, South Korea, Japan and other countries have strengthened the innovation and supervision of blockchain technology. Germany, Switzerland and France are also accelerating the application and development of blockchain technology. The United Kingdom has established a national foundation to support the development of blockchain technology. In 2019, the world-famous American social service website Facebook released the Libra white paper, which instantly attracted the attention of all countries in the world. The United States immediately clarified the requirements of Libra in financial supervision. In 2019, Germany determined the government's priority responsibilities in the blockchain field, and upgraded the innovation and development of blockchain into a national strategy.
 
        Switzerland actively explores the legislative framework of blockchain and cryptocurrency and strives to build a blockchain country. France also promotes the innovation and development of blockchain technology under the leadership of the government. According to the statistics of zero one think tank, although the global capital market is in a downturn due to the impact of the new coronavirus epidemic, in the first quarter of 2020, 82 blockchain related projects were financed, and the disclosed amount reached 5.88 billion yuan. The enthusiasm for project financing has not decreased. From this, we can see the enthusiasm of countries around the world for the development of blockchain technology. For the specific definition of digital currency, there is no unified authoritative definition at home and abroad, but many experts and scholars have put forward their own views.
 
        Zhou Xiaochuan, former governor of the people's Bank of China, believes that digital currency is a kind of digital currency with three important characteristics: it is issued by the central bank, replaces physical cash and increases the convenience of transactions. Yao Qian, the first director of the digital currency Research Institute of the people's Bank of China, systematically studied the digital currency and believed that the legal digital currency was a monetary form issued by the central bank and realized by using digital cryptography technology. The value connotation of the legal digital currency is still the debt issued by the central bank to the public with the value of national credit as the support. Mu Changchun, the second director of the digital currency Research Institute of the people's Bank of China, believes that the function of digital currency is exactly the same as that of paper money, but the form is digital.
 
        The development of digital currency belongs to the category of the development of credit currency. Digital currency is a kind of credit currency, which has no value in itself. In essence, it is a sequence symbol of wealth value. Although there is no authoritative definition of digital currency so far, some consensus on digital currency is undeniable. As a kind of digital currency, digital currency has the advantages of high speed, low cost and high anonymity compared with traditional currencies. Nowadays, digital currency is used in various scenarios such as consumption, salary and tuition payment, and tourism, and the consumer population is more extensive. The emergence and development of non sovereign digital currencies are having an impact on fiat currencies, especially the emergence and development of Libra global stability currency launched by Facebook.
 
        Non sovereign digital currency has a high degree of independence, occupying part of the functions of a country's sovereign currency, expanding the transaction boundary and behavior boundary, and increasing the difficulty and difficulty of the operation and supervision of the financial system. Faced with the impact of non sovereign digital currencies such as bitcoin and Libra, China and many other countries in the world have accelerated the development and layout of sovereign digital currencies to cope with the global digital currency system competition. Legal digital currency has the advantages of improving payment efficiency, reducing costs, improving financial inclusion, higher privacy, preventing crime and money laundering, improving the effect of monetary policy and improving the competitiveness of domestic legal currency. The research, development and application of a country's legal digital currency can keep pace with the times, meet the needs of the public, and be conducive to the stability of a country's financial system and economic development.
 
        Under the initiative of Zhou Xiaochuan, former president of the people's Bank of China, China has started to discuss digital currency since 2014, and set up a digital currency research group to discuss the regulatory framework, key technologies, issuance and circulation environment and other related issues of the central bank's issuance of digital currency. In 2017, the people's Bank of China established the digital currency Research Institute to conduct research and development on the digital RMB system. In 2019, Mu Changchun, deputy director of the Settlement Department of the people's Bank of China, said at the third China finance 40 people Yichun forum that after five years of research, the people's Bank of China's digital currency is ready to emerge. On April 3, 2020, the people's Bank of China stressed to further promote the research and development of legal digital currency.
 
        In May 2020, Yi Gang, the current president of the people's Bank of China, said in an interview that the research and development of digital RMB has been conducted in the internal closed pilot test to test its performance. The test sites are mainly in Shenzhen, Suzhou, xiong'an, Chengdu and the future Winter Olympic Games. However, there is no timetable for the official launch. At present, the digital RMB project is moving towards widespread popularization. Many countries around the world have also started the research, development and implementation of digital currencies very early. Emerging market economies such as Ecuador, Venezuela, Tunisia, Uruguay, Senegal and Marshall Islands have the most positive attitude towards digital currencies, and have issued digital currencies one after another, but the results are not optimistic.
 
        Ecuador had introduced Ecuadorian currency as early as 2015, and finally failed because its circulation was less than 0.03% of the total currency of the whole economy. In 2018, Venezuela launched the oil coin in China, but the effect was not as expected. Because the people of Venezuela did not like the oil coin, its circulation became difficult. The results of two questionnaires on digital currency conducted by the international clearing center and the payment and market infrastructure Committee on more than 60 central banks in the world in 2018 and 2019 show that the attitude of central banks towards digital currency issuance is still conservative and wait-and-see. Although many countries do not have a positive attitude towards the issuance of digital currency by central banks, their enthusiasm for the research of digital currency is very high, and central banks have made considerable progress and breakthroughs in the research of digital currency.
 
        In 2020, under the catalysis of the epidemic and the stimulation of the global stability currency Libra, many countries that are cautious about the central bank's digital currency accelerated the research and development of the central bank's digital currency. At the beginning of 2020, digital currency was listed as one of the top priorities by the International Monetary Fund. The bank for International Settlements, together with the central banks of Europe, the United Kingdom, Switzerland, Japan and Canada, set up a group to study and develop the application cases of central bank digital currency. Although Japan repeatedly indicated in 2019 that it would not consider issuing the central bank's digital currency, under the development trend of digital currencies in various countries, the Bank of Japan issued the Research Report on Bank of China's digital currency (CBDC) in November 2019, which demonstrated the legal basis of Bank of China's digital currency.
 
        At the beginning of July 2020, the Bank of Japan issued a report entitled "technical barriers to the central bank's digital currency", stating that it would test the feasibility of the central bank's digital currency from a technical perspective. In February 2020, the Swedish central bank began the test of its central bank's digital currency electronic Krone. The chairman of the Federal Reserve also said that the United States was studying the central bank's digital currency. In March 2020, the Bank of Scotland, the Bank of England with a long history, released the central bank's digital currency: opportunities, challenges and design. This 57 page discussion report shows the UK's grasp of digital currency and possible actions. In March 2020, the Central Bank of France issued a collection order for CBDC experimental application scheme. Recently, the central bank is conducting experiments on digital currency. On May 14, the first test of digital Euro based on blockchain was completed.
 
        Blockchain technology and digital currency are two terms closely linked. When it comes to digital currency, people will inevitably mention blockchain technology with many technical advantages. However, there are many problems when blockchain technology is applied to the central bank's digital currency. Blockchain technology is only one of the alternative technologies of the central bank's digital currency, and it is not necessary. In February 2020, the Swedish central bank started the experiment of CBDC built by corda based on the blockchain alliance R3. According to the recent report of the Bank of Japan, since the central bank's digital currency can avoid a single point of failure when using the blockchain technology and has certain resilience, the blockchain technology will be considered by the Bank of Japan to be included in its central bank's digital currency plan.
 
        Other countries and regions, such as Europe, Thailand, Canada and Singapore, also use decentralized technology in the research and development of central bank digital currency. However, the centralized technology is still relatively immature in the world. Before that, although Iran, Ecuador, Uruguay, Senegal, etc. all issued digital currencies relying on blockchain technology, they were not popular. It can be said that the Bank of Scotland has the earliest involvement in the research of the central bank's digital currency based on the blockchain. In 2014, the Bank of Scotland issued a report entitled "payment technology innovation and the emergence of digital currency". In 2016, the Bank of England started the central bank's cryptocurrency & mdash& mdash; The experiment of rscoin system, but because the distributed ledger technology is not mature at present, the research based on the blockchain technology CBDC is not optimistic.
 
        Blockchain technology has the characteristics of decentralization, which is inconsistent with the central bank's demand for centralized management of digital money. In February 2020, the digital currency Research Institute of the Central Bank of China made it clear that the establishment of the payment service system provided by the central bank conflicts with the decentralized characteristics of the blockchain, and it is not recommended to rely on the blockchain to transform the traditional payment system. At present, China's digital RMB system has been tested. At the central bank level, the technology is neutral and open, and no unique technology is specified. The central bank's digital currency (DCEP) adopts a hybrid architecture of two-tier operation mode and one currency, two banks and three centers. Its main features are centralized issuance, distributed authorization, point-to-point payment and combination with blockchain technology.
 
        The centralized distribution does not need to run the consensus algorithm, so it will not be subject to the performance defects of the blockchain. Although it does not rely on the blockchain technology, it also does not ignore the advantages of the blockchain technology. In combination with the blockchain technology, the central bank registration center may use the confirmation chain based on the blockchain to confirm the status of digital currency, and can use the blockchain to store multi-party information and increase the privacy of transactions. In the report of the Bank of England in March 2020, the Bank of England also indicated for the first time that there was no need to use distributed ledger technology. Although many countries have made a lot of achievements in the research of blockchain technology, the development of blockchain technology is still immature. The application of blockchain technology to the central bank's digital currency still has problems such as the contradiction between the characteristics of blockchain technology and the central bank's digital currency management needs, the difficulties in the supervision of blockchain technology, and the inability of blockchain technology to meet the efficient demand of retail payment.
 
        The decentralized characteristics of blockchain technology contradict the central bank's demand for centralized management of digital money. The special nature of the central bank requires that the node where it is located should have the highest authority and regulatory ability. Although the central bank's digital currency also combines the blockchain technology, it still
 
        
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