Research on the Application of Blockchain in Central Bank-issued Digital Currency

Lei ZHOU, Yi-ning SUN

Abstract


The successful operation of blockchain technology in bitcoin system guarantees the possibility of the Central Bank-issued Digital Currency (CBDC). By analyzing the evolution logic of digital money, the operation mechanism and main classification of blockchain, we can conclude the main applications of blockchain in the CDBC. First, we can use the consensus mechanism of blockchain and tamper-resistant data to construct the binary system of CBDC. Second, licensing chain helps to balance privacy protection and financial regulatory. Third, alliance chain can meet the demand of system carrying capacity and security for large transaction. Finally, asymmetric encryption algorithm enables achievement of non-fraudulent transfer. When promoting the digitization of legal currency, Central Bank and relevant government departments should also improve the regulation of blockchain and network security. It is important to prudentially assess the impact of CBDC on the current monetary system, and to improve the effectiveness of monetary policy.

Keywords


Blockchain, Digital currency, Central Bank-issued Digital Currency, Monetary policy


DOI
10.12783/dtssehs/ichss2017/19584

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