The concept of DCEP: What is DCEP? The digital currency launched by China's central bank, referred to as DCEP, is the abbreviation of Digital Currency Electronic Payment in English (DC digital currency/EP electronic payment). Its main function is to solve electronic payments and realize the digitization of paper money.
The 10 most comprehensive questions and answers about DCEP:
DCEP is getting closer and closer to us.
1. Why can DCEP replace M0?
The central bank’s positioning of DCEP is to replace M0. The central bank’s explanation for this positioning is that M1 and M2 based on commercial bank accounts have been electronically or digitized, and there is no need to re-digitize them with digital currency.
At the same time, current non-cash payment tools such as traditional bank cards and Internet payments are based on tightly coupled accounts, which cannot fully satisfy the public for offline and anonymous payment services, and cannot completely replace cash M0.
2. How is DCEP launched?
DCEP is basically the same as banknotes. It is a centralized distribution mechanism. The details are as follows: Commercial banks open an account at the central bank and pay 100% of the reserve, and individuals and companies open digital wallets through commercial banks or other financial institutions.
The two-tier structure is because the credit rating of the central bank's digital currency endorsed by the central bank is higher than the deposit currency of commercial banks, which will have a crowding-out effect on commercial bank deposits and may cause "deposit moving", which in turn affects the commercial bank's loan placement ability. Avoiding "financial disintermediation", and at the same time, is conducive to making full use of the existing resources, talents, and technology of commercial institutions to promote innovation and competitive selection through market drive.
3. DCEP carrier The carrier of
cash is banknotes, so what is the carrier of DCEP? According to the central bank's caliber, the central bank will not intervene in the technical route selection of commercial institutions.
But according to the convenience of market promotion and iteration, it is most likely to be App. For users, they don’t even need to go to a commercial bank, just download the App and register, and it can be used to collect payments.
4. How do ordinary users get DCEP?
If you already have a digital currency wallet, how do you get DCEP? It is basically the same as the current currency circulation process. For ordinary users, there are at least three main ways.
1) Recharge from your own bank card;
2) If your company has accepted DCEP from a commercial bank, you can accept DCEP as salary income;
3) Other transaction income.
In addition, according to the information disclosed by the central bank, DCEP will adopt the Bitcoin UTXO model, so the exchange from bank cards to DCEP should be completed by commercial banks or payment institutions participating in DCEP, similar to the role of Tether in USDT issuance and exchange .
5. How to use DCEP? Who will use it?
Since DCEP is positioned as cash, it must be the same as cash. As long as there is a DCEP wallet, it must be able to pay without internet, across banks, and across payment institutions.
The imaginable scenario may be this: as long as there is a digital wallet that meets the DCEP standard on the mobile phone, there is no need for the Internet, and both parties can touch or scan their mobile phones to transfer their DCEP to another person.
However, DCEP cannot replace the cash M0, because people who don't have a smart phone in DCEP obviously can't use it. Zhou Xiaochuan also said that physical currency and digital currency may coexist for a long time.
6. How to realize dual offline paymentThe
current application of dual offline payment has gradually begun to mature. For example, the current smart bus card swiping machines generally use gates and mobile phones dual offline QR code payment technology, and the payment time is guaranteed to be completed within 0.3 seconds.
The official explanation given by Alipay for dual offline payment is that if both parties are offline, they will first record the account and then deduct the payment when the security verification can be done. DCEP is a centralized ledger model, and it is obviously possible to make dual offline payments where the account is first recorded and then deducted.
Because the account is first booked and then debited, based on security considerations, dual offline payment is mainly used for small payments, which is in line with the positioning of DCEP.
7. Payment security issues
Because of the adoption of dual offline payments, many people worry about the security issues of DCEP or the common "double spend" issue of cryptocurrency.
Although DCEP draws on Bitcoin's UTXO model, it is completely different from the decentralized ledger mechanism of encrypted currency. DCEP adopts a centralized ledger mechanism and is a national legal digital currency, just like the counterfeit currency problem in cash. There will be powerful national institutions to monitor and resolve those unauthorized "double spenders."
8. What blockchain technology does DCEP use?
According to the information released by the central bank, DCEP has determined that the blockchain technology adopted is the UTXO model of Bitcoin, which is the non-account model, so it is expected to adopt asymmetric encryption technology.
The current central bank's policy is to be technology-neutral and not to interfere with the selection of technical routes of commercial institutions. Moreover, the Central Bank Digital Currency Research Institute adopts a horse racing model. Under the premise of voluntarily, each bank will try first, and which one will try it well in the future does not rule out directly adopting this model.
9. The similarities and differences between DCEP and WeChat Pay and Alipay.
First of all, DCEP is a legal digital currency system. WeChat Pay and Alipay may only be DCEP nodes and DCEP wallets. The APP may provide DCEP and bank deposit exchange functions. Other usage scenarios and There is little change now.
Secondly, DCEP can be used across apps, unlike WeChat Pay and Alipay that set payment barriers that do not support each other.
Again, in terms of legal status and security, DCEP far exceeds Alipay or WeChat Pay. If Alipay or WeChat Pay goes bankrupt, the money in them is not protected, and DCEP is protected by the central bank’s lender of last resort.
10. Other issues
KYC has grading and quota arrangements for DCEP digital wallets for anti-money laundering considerations. According to Mu Changchun in the Dedao course, DCEP wallet can be bound with mobile phone number, ID card, and bank card. Wallets registered with mobile phone number can only meet the daily micropayment needs; upload ID or bank card to get Higher level; the highest counter sign.
How to bind UTXO to mobile phone number, ID card and bank card? This information still needs to wait for further disclosure by the central bank.
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