The details were revealed by China State Intellectual Property Office (SIPO). The patent is perceived to be a part of the Central bank’s plan to develop a cryptocurrency that carries the best of the features of cryptocurrency and fiat money.
A quick look at the list of patents filed by the research organization indicates that each of the patent focuses on a particular feature of a virtual currency system. The patents, when grouped together, reveals a technology that can be used to create a digital currency and a wallet that would allow users to transact in an end-to-end fashion.
While the recent patent documents explain how the system will enable users to validate transactions, the previous documents portrays the manner in which wallets will facilitate the transactions.
It seems the ultimate aim of these patents is to break the jinx between the decentralized ledger based cryptocurrency and fiat money system. Such a scenario will facilitate adoption of the cryptocurrencies. The recent patent indicates the wallet would store the cryptocurrency issued by a central bank or any authorized central entity in an encrypted format with private keys and provide multi-signature security, but in a decentralized manner.
In one of its documents, the research lab has stated the mechanism being built will pave way for the use of cryptocurrencies in the financial world. The PBoC’s vice governors Fan Yifei and Yao Qian, the head of the research lab, have recently expressed the need to adopt a balance between centralization and decentralization. This opinion is reflected by the hybrid approach of the central bank.
In a patent application released in November 2017, the research lab had stated
“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.”