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China crypto news of the week (July 11 to July 18 ) : Six points about e-CNY (China CBDC)
The Central Bank of China released a white paper on e-CNY (CBDC), emphasizing that a reason for the launch is the challenge of cryptocurrency, and it will load smart contracts to achieve programmability.
There are several points worthy of attention：
1.The name is tentatively designated as e-CNY, and the previous expression of DCEP (Digital Currency Electronic Payment) is no longer used. According to the white paper, the letter abbreviation is tentatively designated as "e-CNY" in accordance with international usage practices.
The digital currency Institute of the Central Bank of China began to using D-RMB (also referred to as D currency in the paper) on March 25, 2016, to use DCEP in 2018, Now they start to use the e-CNY, but it is still called "tentative" in the white paper, and it may change in the future.
2. The specification is high.From the perspective of media briefing specifications, this is the first time that fan Yifei, vice governor of the people's Bank of China, Luo Rui, director of the currency and gold and silver bureau, Chen Jianxin, deputy director ofthe currency and gold and silver bureau, and Mu Changchun, director of the Institute of Digital Currency, attended the media briefing of e-CNY to summarize and report the research and development progress of e-CNY.
3.It is only a phased achievement. The "White Paper on China's e-CNY R&D Progress" was released under the name of the "People's Bank of China e-CNY R&D Working Group". The white paper was not published under the name of "People's Bank of China e-CNY Research Institute" or the People's Bank of China, combined with the high specifications of the media briefing, this is a symbolic stage of the development of e-CNY.
4.It has an antagonistic relationship with cryptocurrencies and stablecoins. In the white paper, the third part of e-CNY's R&D background is the part of cryptocurrency, which is basically all negative:
"Cryptocurrencies, especially global stablecoins, are developing rapidly. Since the advent of bitcoin, the private sector has introduced various so-called cryptocurrencies.According to incomplete statistics, there are more than 10000 influential cryptocurrencies with a total market value of more than US $1.3 trillion.Bitcoin and other cryptocurrencies use blockchain and encryption technology, claiming to be "decentralized" and "completely anonymous". However, due to the lack of value support, drastic price fluctuations, low transaction efficiency, huge energy consumption and other restrictions, it is difficult for bitcoin to play its monetary function in daily economic activities.At the same time, cryptocurrency is mostly used for speculation, which has the potential risk of threatening financial security and social stability, and has become a payment tool for money laundering and other illegal economic activities.In view of the big fluctuation of cryptocurrency price, some commercial institutions have launched the so-called " stablecoins", trying to maintain currency stability by anchoring with sovereign currency or related assets.Some commercial institutions plan to launch a global stablecoins, which will bring many risks and challenges to the international monetary system, payment and settlement system, monetary policy, cross-border capital flow management, etc.
Fan Yifei also said at a press conference on July 8 that the issuers of digital currency can be divided into private digital currency and central bank digital currency.We should vigorously promote the central bank's digital currency.Referring to the first response why to crack down on virtual currency, what does the vice governor of the central bank reveal in his latest speech?
5. Part of the blockchain technology is used. It was stated in the briefing:
Financial Times reporter asked: we are very concerned about the technical route of e-CNY, mainly because we don't know whether the blockchain technology has been adopted in the system of e-CNY? If so, what are the specific applications?
Mu Changchun, director of the Institute of Digital Currency of the People's Bank of China, said:
Blockchain has the advantages of non tampering and traceability of data, but it has the disadvantages of performance and scalability. It is more suitable for low concurrency and low sensitivity scenarios such as asset confirmation, transaction transfer and ledger verification. According to the technical characteristics and scope of application of the blockchain, the people's Bank of China has explored innovative applications of blockchain in trade finance, confirmation transaction, transaction reconciliation and other fields, such as trade finance blockchain platform and digital bill trading platform.
According to the top-level design requirements of the e-CNY, the technical route design needs to be based on the principles of long-term technological evolution, practicality and efficiency. The first is to meet the requirements of high retail concurrency and centralized management by the central bank, and a centralized processing method should be adopted at the transaction level; the second is to promote fair competition and improve the efficiency of supervision; the third is to improve the efficiency of clearing and reconciliation, and realize the "settlement" and efficient error handling; the fourth is to meet the anti-money laundering requirements while protecting privacy.
Therefore, at the transaction level of the e-CNY payment system, in order to support high concurrency and low delay, and realize the public holding the central bank's claims directly, a centralized structure is adopted, and all inter agency transactions are transferred through the central bank. At the same time, a e-CNY expression based on encrypted string is designed, which retains the characteristics of security, anti double spending, and unforgeability. It can also load smart contracts with currency related functions, promote business model innovation, and become a catalyst for digital economic activities.In the distribution layer of the e-CNY payment system, a unified distributed ledger is constructed based on the alliance chain technology. The central bank, as a trusted institution, links the transaction data through the application programming interface to ensure the authenticity and accuracy of the data. The operating agency can conduct cross agency reconciliation, collective maintenance of the ledger, and multi-point backup.At the same time, taking advantage of the irreversibility of hash algorithm, the blockchain ledger uses hash digest instead of transaction sensitive information to achieve data isolation between different operators, which not only protects the privacy of personal data, but also avoid the financial data security risk caused by distributed ledger.In order to fully reflect the advantages of "payment as settlement" of e-CNY, the e-CNY system combines the block chain consensus mechanism and programmable intelligent contract features to realize automatic reconciliation and automatic error handling.
On the other hand, the white paper also states that e-CNY can realize programmability by loading smart contracts that do not affect the function of currency, so that e-CNY can carry out automatic payment transactions according to the conditions and rules agreed by both parties under the premise of ensuring security and compliance, and promote business model innovation.
6. There are relatively few individual users.
According to the white paper, as of June 30, 2021, there have been more than 1.32 million pilot scenarios of e-CNY terminals, including more than 20.87 million personal wallets and more than 3.51 million corporate wallets, with a total of more than 70.75 million transactions and an amount of about 34.5 billion yuan.
It can be calculated from the published data that e-CNY has issued a total of 34.5 billion yuan, and a lot of pilot terminals have been deployed. If all the trial amounts are traded with offline pilot terminals, then each pilot terminal has traded about 26136 yuan, and there are 24.38 million personal and corporate wallets, with an average balance of 1415 yuan. Because there are 3.51 million large value corporate wallets, after excluding large value corporate wallets, the balance of personal wallets should be very small.
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