China’s Digital Yuan Will Utilize Smart Contracts

Key Takeaways

  • The People’s Bank of China (PBOC) stated in a new whitepaper that it is using smart contracts for its digital Yuan or e-CNY.
  • Smart contracts supported by e-CNY will act as self-executing payments executed on “predefined conditions.”
  • The whitepaper also discussed software wallets, hardware wallets, and matters related to transaction privacy.

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The People’s Bank of China (PBOC) has published a new whitepaper on its Central Bank Digital Currency (CBDC), the digital Yuan.

China’s Digital Yuan Will Use Smart Contracts

The bank’s whitepaper states that it is using smart contracts for its digital version of the Yuan, also referred to as e-CNY.

These smart contracts will enable self-executing payments that are carried out based on predefined conditions agreed upon between two sides, according to the PBOC’s whitepaper.

Though smart contracts are typically built on a blockchain, the PBOC did not indicate whether e-CNY leverages blockchain technology.

Rather, the whitepaper suggested that e-CNY uses technologies such as digital certificates, digital signatures, and encrypted storage to achieve transactional security and prevent double spending.

This news means that the PBOC will be the first major central bank to integrate smart contracts with a CBDC. The whitepaper notes that smart contracts should boost “business model innovation.”

Hardware Wallets and Transaction Privacy

In addition to smart contracts, the PBOC’s whitepaper says that e-CNY can be stored with different tools, including software wallets and hardware wallets based on security chips.

The document also suggested that, in order to enhance the security of storage devices, components can be added to mobile phones, wearable objects, and Internet of Things (IoT) devices.

The PBOC claimed that importance will be given to safeguarding personal data and privacy of transactions, adding that e-CNY “collects less transaction information than traditional electronic…

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