A Staff member shows a digital 'hard wallet' in Shanghai Jiao Tong University. （PHOTO: XINHUA）

By Staff Reporters

    A digital wallet equipped with a made-in-China chip has recently been put through its paces and passed with flying colors. The wallet can be unlocked through fingerprint identification, support digital currency collection and payment, balance inquiry, transaction information display, health code loading and many other functions.

    There are many types of digital currency, and e-CNY is one of them being issued and piloted by People's Bank of China (PBOC). Both individuals and businesses can open an e-CNY wallet (a kind of digital wallet) in financial institutions designated by the PBOC, to facilitate e-CNY exchange, currency storage, circulation and receipts, payment and business settlement.

    Digital currency trend

    Specifically, the digital wallet can be divided into software and hardware wallets. Software refers to some mobile Apps and various software development kits, while hardware refers to the key associated with digital assets being stored separately in a chip, isolated from the Internet to ensure the security of digital assets.

    "China's digital currency has the same technical characteristics as blockchain technology, such as traceability and non-tampering. However, as legal tender, the central bank's digital currency has a national credit endorsement, equivalent to legal tender and legal compensation. Therefore, the central bank's digital currency is destined to be different from the decentralization of digital currency such as Bitcoin," said Liu Biao, senior vice president of Goldpac Ltd.

    According to Liu,digital currency is designed based on a cryptographic algorithm, which is more secure than general encryption technology based on pure software, with the protection ability of high-security chips in hard wallets.

    R&D in digital currency has become one of the important tasks of the central bank at present. The issuance and application of e-CNY in China are also accelerating. China has taken the lead in issuing e-CNY in Shenzhen and other places since last year. As of October 22, there have been more than 3.5 million e-CNY pilot scenarios in China, and the total number of its users have reached 140 million, with a transaction amount of about 56 billion RMB.

    Current payment methods won't change

    Liu said digital wallets are more secure and their operating systems are more eficient. "In the final analysis, the common payment methods belong to enterprise behavior, which has hidden dangers in data leakage and information security. The e-CNY issued by the central bank is legal tender and belongs to government behavior, meaning the relevant transaction information of the public can only be controlled by the central bank, which is safer," he said.

    According to Liu, the opening of a digital wallet is like applying for a bank card. The digital wallet can operate as a "one -to -one correspondence between people and cards" to prevent accidental brushing and stealing. In addition, compared with the software wallet, the digital wallet can be used to make normal payments (online and offline), to alleviate the plight of the elderly who can't use electronic products in the digital age.

    Therefore, the digital wallet has little impact on the current payment environment, said Liu, adding that, "The biggest impact is to provide another payment method in daily life, which is more convenient and safer to upgrade."

    Application scenarios will be more and more abundant

    Up to now, the pilot areas of e-CNY in China cover most provinces and cities. Among these places, some have introduced incentives for using e -CNY to attract consumers.

    Many buying scenarios, such as food markets and shopping malls, had been developed in Shanghai, Shenzhen, Chengdu, and other e-CNY test areas. As of this October, CHINAUMS has accepted 55,000 e-CNY merchants nationwide.

    The popularization of digital currency will bring new opportunities for the digital wallet. "With the further extension of digital currency's usage scenarios, the further cultivation of public trading habits and the wide application of cross-border payments in China, digital wallets will be the mainstream of payment methods shortly," said Liu.

    Mu Changchun,director of the PBOC Digital Currency Research Institute,said that although the current pilot project has been running quite smoothly, the construction of the acceptance environment is still in progress, and it is necessary to transform and upgrade the acceptance system for all merchants. Moreover, the user experience needs to be improved through diversified, intelligent, customized wallet choices and extensive usage cases.