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Alipay Now Allows Users To Spend Digital RMB: Pay With The Wave Of A Hand

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Li Chen, Chief Compliance Officer of Ant Group, revealed that Alipay, a third-party mobile and online payment platform, had joined the digital RMB (renminbi) acceptance network, as reported by Sina Technology News, on December 12th.

It was also the first payment platform to support the digital renminbi. A digitalized version of China’s official currency, the renminbi (RMB), the e-CNY, is also known as the digital yuan. 

It is issued by the People’s Bank of China, China’s central bank (PBOC). It is primarily made to be used for frequent, modest-sized retail purchases and transactions.

However, currently, the network supports Taobao, a Chinese online marketplace, for them to use digital RMB for their purchases, and related services are being released one after another.

Once an individual has downloaded the Digital Renminbi App from any authorized computer or device to open the digital RMB wallet, they can utilize the app’s various features for immediate transactions to Alipay.

All of the e-commerce websites operated by Alibaba Group Holding will soon support express payments by integrating the Digital Yuan into AliPay. It includes venues such as Taobao, Shanghai Bus, Hungry Leome, Youbao, and Tmall Supermarket, among others.

Additionally, users can look for “playing with digital renminbi” on the Alipay App to get instructions on how to use it, making it easier for them to utilize digital renminbi.

Acceptance Of Digital RMB In China

Both China’s central government and local administrations are encouraging its residents to use the digital yuan. The digital yuan is not dependent on a blockchain, unlike Bitcoin, and is directly issued by the nation’s central bank.

On the front end, transactions are similar to the Chinese yuan (renminbi), but no mediator is taking a cut on the back end. Payments jump from one e-wallet to another just as easily as if they were being handed over in person.

However, the project is being driven in part by China’s leadership’s awareness of how the nation has fallen behind in prior technologies, from internet development to space exploration.

Following this, India’s central bank said earlier last month that it would start introducing a digital form of the rupee. Brazil had intended to introduce a digital real this year, but it has delayed the launch until 2024.

China has a vast population that doesn’t use credit cards and therefore has an easy time adapting to these new technologies. Therefore, the nation is in a prime position to leapfrog the West in terms of adopting digital currency.

Mobile payments exploded when they were implemented in China because many people there don’t have credit cards or are uncomfortable using them. This new method of using Digital RMB via Alipay can make their lives much easier for them.

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Alipay’s Progress in Developing the Official Chinese Cryptocurrency Amidst the Global Chaos

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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.

From February 21st to March 17th, 2020, Alipay has disclosed five patents related to the digital currency of the central bank. [You can find all the patents here]

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”.

 

 

 

People’s Bank of China (PBoC) Almost Complete Sovereign Digital Currency

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Amidst the COVID-19 adverse effect across China and the world at large, there seem no setbacks in the development of China’s digital yuan.

As per the report shared by a Global Times on Tuesday, the People’s Bank of China (PBoC) is way closer to issuing digital yuan. The report was cited with the “industry insiders”, adding to that the central bank is also drafting relevant laws to roll out its national digital currency.

The news comes in a wake of China’s anti-crypto, elaborating three types of scams happening across crypto exchanges. In addition to this, the bank had also noted the crowning cryptocurrency, Bitcoin is not a safe haven and it is too volatile.
On the other side, the recent report also noted that the country’s leading payment platform, Alipay’s patent shows several functions required to circulate, issue or proceed payment for digital currency. The industry insider told the Global Times as follows;

“Judging from the patents, the first step of technological development has been basically completed,”

However, the People’s Bank of China (PBoC) early this year acknowledged that the top leave design of the sovereign digital currency has been completed. However, he quietly noted that the currency is progressing smoothly.

With the coronavirus epidemic continued, people rarely care about fiat or paper money that may likely act as a reason for more COVID-19 cases. That being said, Bitcoin and other digital currencies have been considered as a feasible solution. On the same stance, Industry Insider suggested that the country should move forward of launching this digital currency in ongoing COVID-19 crises which have also affected the financial system.

Nonetheless, Cao Yan, managing director of Digital Renaissance Foundation, stated that;

“If there is a chance China is considering lowering its interest rate into negative territory as a final option and directing such policy to commercial loans and lending, a circulated digital currency rather than M0 will be able to achieve that,”