If/when cryptocurrencies based on official legal tenders become the new banter of the financial market, China has the potential to top the list by being one of the early adopters.
China introducing its own cryptocurrency based on its legal tender Yuan is one of the much-anticipated news of the cryptospace. Nevertheless, things have slowed down due to numerous reasons such as the Bitcoin crash, the current pandemic Coronavirus and much more.
While companies are laying off employees, and people are reporting bankruptcy, Alibaba’s Alipay has been registering several patents for China’s own cryptocurrency.
Recently, a Chinese local blog reported that Alipay has been making preparations for the central banks’ cryptocurrency.
On 21st, “Method and device for executing transactions with digital currencies and electronic devices” was registered followed by “A method and device for managing accounts in digital currency” on the 25th.
On 28th they published, “a method and device for opening a wallet in digital currency and electronic device” and recently on March 17, Alipay issued a patent on “a digital currency-based anonymous transaction method and system”.
The Chinese central bank’s digital currency DCEP adopts a two-tiered structure and requires operating institutions to participate in the secondary issuance of digital currency. This patent revealed in the background introduction that Alipay is likely to participate in secondary issuance, which is on an equal footing with commercial banks.
The decision-makers have also stated that the cryptocurrency may not have a blockchain necessarily but will comply with the traceability requirements of the digital asset. That said, the registered patent’s most important invention is how digital currencies can be traced.
Right, but, how?
Alipay decided to split the digital currency transactions into two; ‘transaction execution instructions’ corresponding to each participant, and priority-based execution instruction. By sorting the results of transaction execution instructions, digital currency transactions can be traced back to the entire life cycle of digital currency circulation, while concurrent processing can be satisfied, which facilitates the controlled and anonymous circulation of cryptocurrencies.
Not just this, the second patent introduces a specific form of front-end encryption machine.
“It can be a hardware device equipped with a secure computing environment. In the secure computing environment equipped with this hardware device, the public and private key equivalent data of the central bank can be maintained. This secure computing The environment can take on some of the cryptographic operations involved in the DC / EP distribution process. “
Additionally, the patent released on 25th Feb provides a solution for the lack of supervision on crypto accounts. The patent introduces a method/device for controlling a digital currency account. Certain account restrictions will be deployed between each supervisor and the operating agency on the wallet server. This will help regulators to keep an account of the transactions.
Lastly, the most recent patent released on 17th March is about making transactions anonymous and how the cryptocurrency would be separate from cash money. The patent describes that “digital currency is different from the electronic amount in the existing electronic account, but is the digitization of cash banknotes, which has the characteristics of a virtual entity”.