Offline Money

New developments in China's digital currency, variously named DCEP (Digital Currency Electronic Payments), CBDC (Central Bank Digital Currency) and digital yuan (as we speculate):
  • DCEP looks to be modelled closer to paper currency (rather than esoteric cryptocurrencies). The digital currency will allow the central bank to issue less notes and coins in favour of a greener, more resource efficient electronic equivalent.
  • Like cash, DCEP is to be usable without an internet connection (during power failure, loss of network, natural disasters) and without a user account.
  • Though radical from a crypto viewpoint, accountless, offline electronic money has been in use for over two decades via tap-and-pay cards from Mifare (TnG, Oyster, Opal, EasyCard) and FeliCa (Octopus, EzLink, DompetKu, Visa).
  • DCEP will not use a blockchain (though it is possible it might still use a distributed ledger) so as to handle a peak of 30,000 transactions per second (vs 92,000 tps peak during 'Singles Day', a big ecommerce sales day in CN, and 5,000-20,000 peak for Visa and Mastercard), and since it is to be operated by a central bank, it does not require distributed consensus.
  • Development of DCEP is by an elite Digital Currency Research Lab which has filed for 74 patents (not using blockchain allows DCEP to develop separately from and not run afoul of blockchain patents).
  • While DCEP by crypto standards might still be fiat (not backed by gold, silver etc) and centralised (though by being accessible and easy to use, it could turn out to be more 'decentralised' from a usage perspective), it certainly looks like DCEP is pushing the digital currency envelope. Over to Libra.