Why does China’s digital currency need to apply for a patent (why develop digital currency)?

China’s digital currency, why does it need to apply for a patent? According to the Patent Office, China has applied for over 400 patents for blockchain inventions. The latest data shows that China currently has over 500 companies applying for and using digital currencies. However, looking at the patent layout, China’s blockchain patents are mainly focused on Bitcoin, Ethereum, and other virtual currencies. So why apply for these patents? We know that the United States Patent and Trademark Office (USPTO) was the first to conduct preliminary examination of China’s electronic payment system based on blockchain technology and published the world’s first patent document on blockchain technology in 2017.

Why develop digital currency

In China, the development of digital currency has always been in the exploratory stage.

Since 2015, China has started to establish the research group for the central bank’s digital currency (CBDC). At the end of 2016, the central bank established the blockchain research center and released the “Financial Technology Development Outlook and Forecast Report”, officially launching the legal digital currency DC/EP (Digital Currency Electronic Payment). Supported by the state, Renmin University of China is also building the “Libra” based on technologies such as big data and artificial intelligence, which is the first national project supported by the Federal Deposit Insurance Corporation after the issuance of stablecoins by the United States. In October 2017, Yi Gang, the Governor of the People’s Bank of China, announced the advancement of the research and development of legal digital currency. As an important participant in the international clearing system, the central bank is actively promoting digitization and pilot testing in related fields. Why continue to develop digital currency? There are two reasons: first, various countries have already formulated regulations to regulate the development direction of digital currencies. The second is that we can see that many countries are accelerating their research progress on digital currencies to respond to a new round of economic crises. On the other hand, there have been a series of policy documents recently on the development of central bank digital currencies, such as Facebook’s plan to release a white paper on digital dollar in June this year and the release of digital euro in early January 2020. (Sina Finance)

So why develop a new digital currency in the current time period? Because it will generate a lot of innovative technical solutions and meet people’s needs. However, this question is not a standalone issue but a solution to a fundamental problem. The fourth aspect is how the government designs its own digital currency.

First, we need to understand what the central bank’s digital currency actually is. Its main feature is that it can be used as a store of value or a means of transfer, rather than a means of doing other things. This is the essence of fiat currency.

Second, for ease of understanding, we should know that the central bank’s digital currency is an electronic accounting unit. This unit of measurement has traceability and tamper-proof features, so if we compare these data together, we can determine this. Therefore, when we use it, we must be careful not to confuse them. The fifth aspect is that the design purpose of digital currency is to authenticate everyone’s identity. Only through such regulations can personal information be secured and ensure that their privacy is not leaked to anyone, which is conducive to protecting citizens’ information security. Additionally, there are some important functions, including low-cost asset management products. For example, when users purchase goods, they no longer need to worry about various intermediaries causing price fluctuations.

Finally, there is the so-called “liquidity risk,” where consumers are unable to obtain cash as they would in normal buying and selling transactions.