preface

Recently, JD.com and the government have launched a pilot battle for the digital yuan. It was this battle that officially opened the curtain of digital currency, and the traditional circulating currency appeared in front of us with a brand new look.

What is the digital RMB

Here’s a quote from Wikipedia:

E-cny, also known as Digital Currency Electronic Payment (English: Digital Currency Electronic Payment) DCEP is a form of digital currency that has not yet been officially issued as the legal tender of the People’s Republic of China, and is currently issued on a small-scale pilot basis by the People’s Bank of China. It will mainly be used for cash in circulation (M0), which will be operated by designated operating institutions and exchanged to the public. It is equivalent to banknotes and coins of THE RENMINBI.

Do you look puzzled?

In fact, the digital yuan is simply the yuan, and the number is just a modification of it, meaning digitization. So the essence of the digital yuan is the yuan, the equivalent of our cash, and it works just as well in your phone as it does in your wallet. It also trades at a rate of one to one with the yuan and has the legal equivalent of cash.

On 23 October 2020, the People’s Bank of China (PBOC) publicly solicited comments on the Revised Draft law of the People’s Republic of China. According to Article 19 of the draft, a clause has been added that “the renminbi includes both physical and digital forms”, which also means that the digital renminbi will be given legal status.

At this time, someone will ask, what is the difference between digital RMB and Alipay payment and wechat payment?

First of all, we need to clarify a concept: digital RMB is currency and mobile payment is payment method. The former is real money, the latter is a way of paying for it.

Alipay, wechat and other applications are actually called Alipay wallet, wechat wallet. What they do is they take our offline wallets and put them online, and then the money in our wallets is presented as data, but it’s still in the bank. Every time we make mobile payment, it is like going to the bank to transfer a lot of money to the bank card of the boss, the vendor and the friend. It’s just that third-party software has helped us cut down on the tedious process. In our view, it’s a direct transaction between us and the merchant.

The transaction of digital RMB is a transaction between currencies through the digital RMB APP, a special wallet. We took a sum of money from our own digital RMB APP and put it in the other’s digital RMB APP. This behavior is the same as taking cash out of your wallet to check out. Meanwhile, the money is only stored in the APP and bound to the personal account. It will not be stored in the bank, nor will it receive interest from the bank, which is exactly the same as the cash lying in the wallet.

Mobile payment and digital RMB have a similar usage experience, but with completely different meanings.

Why digital RMB

Now that mobile payments are so easy, why do we need to do digital yuan?

The reasons are too complex for a programmer to explain in a few words. Here can only talk about the author’s simple understanding.

The first is the digital currency war, the renminbi needs to enter. Digital money originated in Bitcoin. Specific what is bitcoin is not to do more introduction, I believe that we have more or less a certain understanding. In the Internet era when everything is digitized, paperless currency is also a big trend.

At present, the birth of Bitcoin has gradually invaded the global originally stable monetary system. However, due to its particularity, the value of Bitcoin is very unstable without national endorsement, and it cannot be integrated into the monetary system at present.

But the blockchain technology used in Bitcoin is a model. Digital RMB takes this opportunity to enhance the paperless process of currency, turn into the battlefield of digital currency, set up its own voice in the field of digital currency and corresponding technical field in advance, and get rid of the inherent system of DOLLAR hegemony.

Then there are the benefits of paperless and blockchain technology:

  • Reduce the cost of paper money, including the cost of printing money, damage in circulation;
  • Digital technology can prevent counterfeiting to a greater extent and reduce the harm caused by counterfeiting;
  • With the characteristics of anonymous traceable, that is, to protect privacy, but also to a large extent to fight against money laundering, tax evasion, illegal fund-raising and other illegal crimes;
  • Transactions can still be done offline, getting rid of the dependence of mobile payment on the network.

Finally, it can get rid of fees from third-party transactions such as mobile wallets and banks and return to simple transactions in the era of cash. This is also something that maybe people don’t realize.

conclusion

As a programmer, the recognition of the monetary system is still very one-sided. This article is just to understand the digital RMB from a personal point of view and make the business we do more clear. The business itself is more than a task, and the programmer is not a tool person to accomplish the task. Through a business, we can more clearly grasp the direction of the department, understand the direction of the society.