Chinese payment platform Alipay has revealed a number of patents, over the past month, which are related to and revealing more details about China’s digital yuan, the planned digital currency central bank (CBDC).
Alipay is set to play an integral part in the currency’s major functions when it’s launched, according to a report in the local media outlet Interchain Pulse.
Alipay ٍSecondary Issuer of CBDC
The first patent, announced in February, revealed that Alipay is likely to be involved in the secondary issuance of the currency as a third party operating agent. This would put Alipay on an equal footing with commercial banks, which will not have a secondary digital currency monopoly.
The most important revelation, however, is how the digital currency can be traced, requiring a blockchain-based currency’s functionality, despite not relying on blockchain technology itself.
Transactions will be divided into execution instructions that correspond to each party, along with priorities for execution of each instruction. Instructions are then sorted into order and executed. The transactions can be traced back for the entire life cycle of the CBDC by following the sorted execution instruction list backwards.
A related patent, issued Feb. 28, details front-end encryption machines, deployed by the central bank with the currency’s secondary issuers. These would monitor secondary issue and transactions, and would be roughly analogous to a blockchain node.
Alipay published a patent on Feb. 25 detailing “a method and device for controlling digital currency accounts”.
The regulator will provide the operating agency with a control device that can be used by supervisors to restrict suspected accounts within predefined rules. This will allow supervisors to circumvent the operator’s need to pass through, allowing for immediate restrictions.
Restrictions that can be applied include blocking one or more account operating authorities, baning currency flows into and/or out of the target account, and freezing all funds held in the account.
CBDC May Support Anonymous Transactions
Another Alipay patent published on Feb. 28 states that there will be several different types of digital currency wallet, each of which provides different services, and specifies a method for identifying which type a user has.
It suggests this can be ascertained on the basis of two results, depending on the behavioral data of the user and the identity data provided.
If the earlier patents suggest a heavy-handed overview, monitoring and control of the entire CBDC ecosystem, an Alipay patent published March 17 states that it will support anonymous transactions.