PBoC Filings Reveal Big Picture for Planned Digital Currency

The Digital Currency Research Lab at the People's Bank of China has filed more than 40 patent applications so far - all as part of an aim to create a digital currency combining the core features of cryptocurrency and the existing monetary system.

Each of the 41 patent applications focuses on a certain aspect of a digital currency system, and, when combined, would create a technology that issues a digital currency, as well as provides a wallet that stores and transacts the asset in an "End-to-end" fashion.

The most recently revealed patent application explains how the envisioned digital wallet would allow users to check any transactions made through the service, while earlier documents offered details on how the wallet can facilitate transactions.

The ultimate goal, according to PBoC's patents, is to "Break the silo between blockchain-based cryptocurrency and the existing monetary system" so that the digital currency can sport cryptocurrency-like features, while being widely used in the existing financial structure.

Last week's patents further explain that the envisioned wallet would not be limited, like a typical cryptocurrency wallet, to merely storing the private key to a certain asset.

Instead, the patents indicates the wallet would store a digital currency issued by the central bank or any authorized central entity that is encrypted like a cryptocurrency with private keys, offers multi-signature security and is held by users in a decentralized way.

The research lab said in one of the documents that it believes it is building a mechanism that makes a crypto-featured digital currency more applicable in the financial world.

Overall, the patent applications filed so far signal the continuous efforts made by China's central bank to develop its own central bank digital currency, as well as to potentially widen the application's role among other central institutions.

"The virtual currencies issued by private entities are fundamental flaws given their volatility, low public trust, and limited useable scope. ... Therefore, it's inevitable for the central bank to launch its own digital currency to upscale the existing circulation of the fiat currency."

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