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China prepares its official digital cryptocurrency, called DC / EP, and four of its banks are already testing it on mobile

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China prepares its official digital cryptocurrency, called DC / EP, and four of its banks are already testing it on mobile

China prepares its official digital cryptocurrency, called DC / EP, and four of its banks are already testing it on mobile

The People’s Bank of China (PBOC) has been working for a long time on the development of a digital currency called DC / EP (Digital Currency / Electronic Payment) that would propose an official and legal alternative to the yuan or renmimbi, the fiat currency on which its economy since 1949.

Now a few screenshots of the mobile application that will allow to operate with this digital currency have appeared, and there are four national banks in China that are already testing DCEP. This coin is based on a blockchain created for this purpose, and will have a 1: 1 parity with the yuan. The goal: to convert it into a global currency that competes with the dollar . What better than to do it through the mobile?

An official cryptocurrency that wants to conquer the world

new china digital currencies

The development plans carry the DCAP running time . Two years ago our colleagues at El Blog Salmón were already talking about some initiatives in this regard by several national banks, but Facebook’s announcement of Libra – now paralyzed – seems to have precipitated the efforts of the People’s Bank of China.

The mobile payments application that will allow operating with DC / EP is already being tested with the participation of the four national banks of the Asian giant in addition to the People’s Bank of China. Not only that: also the electronic payments giant Ant Financial and the well-known operator Tencent are involved in this deployment.

The preliminary application is available for iOS and Android and allows you to show the initial options that will be available in this system: each user will have a DC / EP wallet on their mobile with which they can make payments through QR codes — a system that is already fully extended in China thanks to WeChat mobile payments—, and will also allow you to send or receive money and even initiate transactions by putting two mobiles in contact.

One of the users who has had access to the application has published some screenshots of the mobile application in which she indicated how payments can be sent and received even if both ends are offline , or how conversions can be made in the wallet between yuan (renmimbi ) and DC / EP.

As this person explained , with the alias “Molly” on Twitter, confinement by coronavirus may have been one of the causes of accelerating the development and deployment of DC / EP . With a digital currency, the use of traditional fiat money, coins and banknotes is avoided, which become one more contagion vector.

Several agencies in early February recommended that mobile and digital payment systems be promoted instead of cash payments. Several intermediaries such as UnionPay lowered commissions to boost the use of its services, and all of this is combined with the characteristics of the cryptocurrency, which will help prevent fraud and money laundering.

That’s right and that’s how DC / EP works

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This official cryptocurrency , described in depth in Boxmining , is based on encryption technologies analogous to those used in other cryptocurrencies such as bitcoin or Ethereum, and since they are also based on a specific blockchain or blockchain created by the People’s Bank of China as part of this infrastructure that will guarantee the traceability of all money transfers.

As they explain there, DC / EP is a cryptocurrency created, controlled and blessed by the Chinese Government , and it is not a cryptocurrency created by a third party. There have been attempts in this regard with tokens like CNHT, which also advocated a 1: 1 parity with the yuan, but DC / EP is the only legal digital currency in China.

This currency is not subject to speculation mechanisms – there will also be no DC / EP mining and it will not have a decentralized philosophy – that exist with cryptocurrencies such as bitcoin, and it will be distributed to commercial banks affiliated with the Central Bank of China such as ICBC or the Agricultural Bank of China. The idea is to present it as a substitute for the country’s monetary reserve system.

Huang Qifan, president of the China Center for International Economic Exchange, said his agency had been working on the development of DC / EP for six years and that he already had full confidence in its potential introduction into the Chinese financial system. For him, alternatives such as SWIFT have become obsolete due to their cost and slowness .

One of the curiosities of this currency is that mobile payments can be made even without connection to data networks. It will be enough to use NFC technology . In addition, the mobile will not have to be linked to a bank account, something fundamental that will allow even people who do not have access to the banking system to have their DC / EP wallet and access to this digital currency.

We are therefore facing one of the most important movements at the economic level in recent years: if confirmed, China would have a unique tool with which to become the first country with an effective digital currency that could also be used globally and that could put in commitment to other currencies such as the dollar or the euro that are widely used outside of their own economies.

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