Digital Currency Electronic Payment, A Brief Interpretation Helping Freshman Grasp the Central Bank’s Digital Currency DCEP

01 What exactly is DCEP?

Let’s compare DCEP with the commonly used bank accounts, WeChat, and Alipay. If you have 319 yuan, you only record a 319 yuan number in your bank account, WeChat, and Alipay. However, this is not the case for DCEP. If you have a DCEP of 319 yuan, you actually have 3 DCEP of 100 yuan, 1 DCEP of 10 yuan, and 9 DCEP of1 yuan in your DCEP account. Everyone will wonder, is DCEP the same thing as using paper money and banknotes? That ’s right, this is the essential difference between DCEP and WeChat, Alipay, and bank accounts. DCEP is not an electronic currency, but a real electronic RMB. It is the replacement of M0, what is M0, M0 is the cash and banknotes in circulation.

Figure 1: DCEP Field Structure

02 What exactly has DCEP changed?

As mentioned earlier, today ’s sharing, we will focus on the main clue of payment. We believe that the most significant change brought about by DCEP is the change in China ’s payment field and future payment methods. Before the DCEP, according to the report of the Central Bank’s “Overall Payment System Operation in 2019”, we can see that China’s payment system is actually divided into two major blocks, the first is the central bank’s payment system, and the second is non-central bank payment system.

Figure2: The Current Payment System In China
Figure 3: DCEP System Architecture
Figure4: DCEP Full-amount Real-time Settlement Mode
Figure5: DCEP’s “cancellation-re-produce” Payment Plan
Figure 6: DCEP’s Smart Contract Application

03 What does DCEP mean for blockchain practitioners?

After the release of DCEP, there will be a large-scale upgrade and transformation of three systems: The first is the central bank system. The central bank will completely build a new system for DCEP issuance, return, control and management, including systems that involve encoding and decryption, changes in ownership, etc. The current system is only used for internal testing, which is not enough from a complete, large-scale commercial-grade system, so this is the central bank ’s annual investment. Since this business involves the central bank’s core system, it is generally developed and maintained by the central bank’s self-built team, so no wasting for it. The second block is commercial banks and third-party payment companies that are second-tier institutions. They used to only have fiat currency account business. In the future, they must build a new DCEP management system. The original core system includes ATMs and POS. Such equipment also needs to be transformed, and is compatible with the legal currency account business and the DCEP business system. This business will have some traditional financial IT service companies to do unified system undertaking. Our private blockchain technology team may have the opportunity to get one of the module projects. The third block is the application chain and application-end systems of various industries, including B-side and C-side. We have talked about a lot of business on-chain and business contract in the past, and finally failed to solve the problem of trusted payment on the chain. As business on-chain and business contracting have not formed a closed loop, they have been developing slowly. But after the emergence of DCEP, the payment behavior itself can be controlled by smart contracts, then the closed-loop problem of the entire business can be solved well, so the development of various industrial chains and application chains will be greatly accelerated.

Figure 7: Blockchain Infrastructure Platform Concept

04 Q&A

Q: What kind of development will DC / EP usher in 2020? How does payment affect the currency?



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