Insight into central bank patents: digital currency generation, circulation, and recovery solutions have taken shape

Article 丨 Interlink Pulse · Yuan Shang
 

The epidemic has given rise to calls for faster development of the "digital currency." However, the central bank's digital currency still embracing the pipa, and the pilot scene and launch time have not been made public.

On the other hand, the technical details of the central bank's digital currency are inadvertently released to the outside world like a "squeezing toothpaste", sometimes a word from a central bank official, and sometimes a move from a partner.

Mutual Chain Pulse noticed that on February 4, the central bank announced another patent on digital currency, which was named "a method and system for generating digital currency." At this point, the central bank's patent for the entire process of issuing digital currencies has been applied for, including generation, circulation, and recovery. It can also peep into the operating characteristics of central bank digital currencies.

It is worth noting that the applicants for these three patents are the Digital Currency Research Institute of the People's Bank of China. The applicants include "Mu Changchun and Di Gang". They are currently the director and deputy director of the Central Bank Currency Research Institute.

Generation of digital currency

The generation of currency is critical to a country's economy. Physical currencies, including banknotes and metal coins, are executed by special banknote printing and coin minting mechanisms. Digital currency will not need these institutions, and its generation is disruptive. At present, digital currencies such as Bitcoin and Ripple have been produced on the market.

In the patent document, the People ’s Bank of China noted that “because the privately-issued digital currency scheme itself has anonymity, low cost, cross-regional, decentralization, high proliferation, and high volatility, it is extremely easy to pay the system And financial stability, etc., therefore, it is necessary to establish a safer, more efficient, more flexible and more practical digital currency issuance and circulation mechanism, while ensuring the convenience of digital payment, and ensuring the legality of digital currency And security. "

The above statement clarifies the consistent attitude of the central bank that privately issued digital currencies are illegal or even insecure, and have an impact on payments, the economy, and finance. Therefore, the purpose of issuing digital currency of the central bank is to inherit the advantages of private digital currency, but also to ensure its legitimacy and security.

According to the scheme mentioned in the patent, a module that generates a large amount of digital currency is required: a quota control bit generation request module and a currency generation module.

The quota control bit generation request module is configured to send a quota control bit generation request to the quota control system. The quota control bit generation request indicates currency transaction information, one or more currency generation amounts, and identification information of the digital currency placement system.

The currency generation module is configured to receive one or more first quota control bits returned by the quota control system according to the quota control bits, and according to the first quota control bits, the identification information of the digital currency owner, and the digital currency issuing agency Signature information to generate digital currency.

The workflow is that the quota control generation request module sends a quota control bit generation request to the quota control system, the request includes currency transaction information, one or more currency generation amounts, and identification information of the digital currency placement system; the currency generation module receives the quota control The system generates one or more first quota control bits returned by the request according to the quota control bits, and generates digital currency according to the first quota control bits, identification information of the digital currency owner, and signature information of the digital currency issuing agency.

The patent also describes the digital currency generation algorithm. The SM3 algorithm calculates the amount of money generated and the identification information of the digital currency placement system to generate a first digest. The SM2 algorithm encrypts this digest to generate the signature information of the central management system.

Digital currency circulation and recycling

On January 7 this year, another patent of the Central Bank's Currency Research Institute, "A Method and System for Circulating Digital Currency," was released.

In this patent, the Institute believes that "At present, there is no currency transfer in the existing digital currencies such as Bitcoin and Ethereum during the circulation process. It is just a continuous set of transaction records. The basis of digital currency circulation is transaction rather than the currency itself. Therefore, the existing digital currency cannot meet the requirements of actual currency circulation; at the same time, because the current digital currency circulation method is anonymous, once lost, it is difficult to retrieve it It meets the needs of practical application of currency and cannot be reasonably controlled.

Therefore, this patent provides a method and system for the circulation of digital currency, which can not only realize the circulation of digital currency itself, but also control and control the amount of digital currency in circulation, and realize the control of digital currency circulation. "

The above statement can be seen from the central bank's point of view, Bitcoin and Ethereum have natural defects in becoming a currency, and more importantly, they cannot be controlled. The central bank's digital currency needs to be manageable in circulation.

To achieve these goals, the central bank invented two major systems. The first system is a set of currency delivery systems, including: a transaction processing module, a currency processing module, and a currency generation module;

The second system is to provide a quota control system including: a quota control bit verification module, a control module, and a quota control bit generation module.

The invention also proposes two circulation methods of digital currency.

Money is issued and recovered. However, compared to paper money, digital currencies do not need to recover those broken, expired currencies. However, in order to achieve regulation, control currency circulation, version upgrades, etc., the currency will still be recovered.

The Central Bank's Digital Currency Research Institute also specifically invented a recycling program for it. On December 27, 2019, the central bank's digital currency research institute's patent application "a method and system for recovering digital currency quotas" was announced.

According to the patent description, the purpose of the invention is to consider that, generally, the central management system (such as the central bank) sets the rules for currency issuance and recovery, and it ensures that the central management system can not affect the monetary policy operation of the central management system. Authorized qualified money placement institutions to recover the quota. Due to the interest-driven nature of currency placement institutions, there may be violations of the recycling rules, which may result in a lower security of quota recovery. In view of this, the invention is designed to provide a method and system for credit line recovery of digital currency, which can provide a safe and convenient application environment for credit line recovery, thereby improving the security of credit line recovery.

In order to achieve the above purpose, a central management system is designed according to the invention of the central bank, which includes: a voucher processing module and a transmission module; wherein the voucher processing module is used to receive the recovery voucher sent by the digital currency delivery system, and The voucher is processed, and the processing result is sent to the transmission module; wherein the recovered voucher indicates the amount to be recovered;

A transmission module, configured to send the processing result to the digital currency placement system. The received recovery credential is encrypted by a first key; a credential processing module is configured to decrypt the recovery credential by using the first public key, determine the quota to be recovered, and to perform the verification on the quota according to the quota to be recovered The authorized amount of the digital currency placement system is updated to generate the processing result.

(Schematic diagram of digital currency recycling)

From the end of last year to the beginning of this year, digital currency patents applied by the Digital Currency Research Institute of the People's Bank of China showed that the most important solutions for the issuance, circulation, and recovery of digital currencies can be solved.

In terms of digital currencies, the central bank has applied for the most patents in the world. As of February 20, the Central Bank's Digital Currency Research Institute has applied for 65 applications, and the Central Bank's Printing Science and Technology Research Institute has applied for 22 applications.

References:

* CN201910808029.5-A method and system for the circulation of digital currency [ZH]

* CN201910808039.9-A method and system for generating digital currency [ZH]

* CN201910808608.X-A method and system for recovering the amount of digital currency [ZH]