Governor Zhou Xiaochuan said that the PBOC is considering mobile payments, cloud computation, secure chip and blockchain tech as means to create and operate an electronic cash network.
The comments follow speculation about the PBOC’s 20th January announcement of the program, which left it unclear as to what the central bank meant by its use of the phrase ‘digital currency’, a term long associated with Bitcoin and other blockchain-based consensus networks.
One topic where Bitcoin was specifically discussed in relation to the PBOC’s digital currency initiative was its ability to offer privacy, an attribute Xiaochuan said would need to be a component of the digital currency offering. Though all Bitcoin transactions are recorded and broadcast via the public blockchain, transactions are afforded a degree of privacy through the network’s pseudonymous address system.
The question also alluded to the ‘51% attack’ security risk on the Bitcoin network, whereby a miner or collection of miners representing more than half of the hashing power would be able to corrupt the veracity of its decentralized ledger. In this respect, Xiaochuan hinted that a blockchain-based digital currency issued by the bank was likely to run on a permissioned network that would guard against outside tampering.
Xiaochuan indicated that while there is no timetable yet for the release, it is unlikely that such a system would completely replace the need for a paper currency. Xiaochuan suggested that if its digital currency was phased into the economy, it could become gradually more expensive to transact in paper-based money, thereby motivating users to make the transition.
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