What is the difference between digital currency and electronic payment? Let's understand the essential connotation of central bank digital currency

　　Recently, the People’s Bank of China stated that the closed trial of legal digital currency has been successfully launched. In the second half of the year, it will actively and steadily promote the research and development of legal digital currency. The “four major banks” such as the Industrial and Commercial Bank of China are also testing the central bank digital currency app on a large scale. Yue is testing on landing scenes. What is the essential difference between the central bank's digital currency and our commonly used electronic payments such as Alipay and WeChat Pay? What changes will digital currency bring to our lives? We can understand the essential connotation of the central bank's digital currency from four aspects: value support, technical dimension, implementation and application scenarios.
　　First, the central bank's digital currency is a credit currency from the perspective of value. On the one hand, the central bank's digital currency is a new form of the renminbi that has developed into the digital economy era, conforming to the trend of the digital economy. On the other hand, the central bank's digital currency is still a debt issued by the central bank to the public. It is supported by national credit and has unlimited legal repayment. Compared with physical legal currency such as banknotes or coins, the central bank's digital legal currency has changed to a technical form, while the value connotation remains unchanged. Electronic payment tools such as Alipay and WeChat Pay mostly use commercial bank deposit currencies for settlement. In theory, all commercial banks may go bankrupt. Of course, the situation has changed after the centralized depository of electronic payment institutions' reserves. In addition, some current electronic payment institutions and platforms will set up payment barriers, such as only supporting WeChat or Alipay, but for central bank digital currencies, as long as they can use electronic payments, they must accept central bank digital currencies. In general, WeChat and Alipay have not reached the same level as banknotes and central bank digital currencies in terms of legal status and security.
　　Secondly, the central bank's digital currency uses encryption technology from a technical perspective . The public is most concerned about currency security, privacy and convenience. Encryption technology is a key element for legal digital currency to achieve security, privacy, and convenience.
　　In terms of security, the central bank's digital currency will maximize the security of transactions , use encryption technology to ensure end-to-end security in the transaction process, prevent theft, tampering, and impersonation, and have unlimited legal compensation. In contrast, Internet payments are electronic payments based on bank accounts, and it is difficult to avoid problems such as misappropriation of customer reserve funds, leakage of customer information, and false transactions.
　　From the perspective of privacy, the central bank's digital currency can be as easy to circulate as banknotes and coins . Transaction information and personal privacy will not be disclosed to other third parties, and only disclosed to the central bank, achieving "anonymity and controllability." Traditional bank cards and Internet payments are based on tightly coupled accounts, which cannot fully meet the public's demand for easy-to-use and anonymous payment services. The central bank digital currency maintains the attributes and main characteristics of cash . While providing users with a peer-to-peer payment experience that is different from traditional electronic payments, it also uses privacy protection technology to ensure user data security and avoid sensitive information leakage.
　　In terms of convenience, the central bank's digital currency can be used only by downloading the digital wallet , without applying for a bank account, and paying for small-amount scenarios without the need for the Internet. "Dual offline payment" is supported, which means when both parties are offline. , Can also make payments. As long as the mobile phone has electricity, payment can be realized even if the entire network is disconnected. In extreme cases, such as when communications are cut off during an earthquake, the central bank's digital currency can also be used for payment. In addition , secured by a variety of technologies such as encryption technology, the central bank's digital currency circulation and anti-counterfeiting costs have also been greatly reduced, reducing the cost of the issuance, printing, return and storage of banknotes and coins in the past.
　　Third, the central bank's digital currency is an algorithmic currency in terms of realization . The emergence of central bank digital currency allows us to use big data and artificial intelligence algorithms to conduct in-depth analysis of currency issuance, circulation, and storage, understand the laws of currency operations, and provide data support for intervention needs such as macro-prudential supervision of monetary policy. From this perspective, the future issuance of central bank digital currencies will be affected by algorithms. From another perspective , a variety of encryption algorithms are used in the implementation of digital currency to ensure safety and credibility, so the central bank digital currency is a well-deserved algorithm currency.
　　Finally, the central bank's digital currency is expected to become a smart currency in terms of application scenarios .The digitization of currency forms will help increase the traceability and programmability of currency, and is also expected to make the execution of monetary policy smarter. The programmability of currency has a lot of room for imagination. We can imagine future charity donations. The donated money can be designated to the school. The money cannot be misappropriated in the intermediate process. Once misappropriated, other institutions will not accept it . Therefore, the central bank's digital currency can also be widely used for targeted poverty alleviation and financial allocation.
　　Of course, as Fan Yifei, the vice governor of the People’s Bank of China, said, the current central bank digital currency is an alternative to M0 , that is , it assumes functions such as value scale, circulation means, payment means, and value storage. Some social and administrative functions other than the 4 functions. Although the programmability of digital currency has a lot of room for imagination , it needs a long period of exploration and accumulation before real application.