Insiders Hint on Digital Yuan’s Anonymity to Protect User’s Privacy
The head of the digital currency research institute (DCRI) the arm of the People’s Bank of China (PBoC) responsible for the development of the digital yuan (e-CNY), has disclosed that China plans to tighten legislation around the digital currency to protect user privacy. Mu Changchun spoke at the government-backed 5th Digital China Summit in Fuzhou on Sunday as he tried to clear the “misunderstandings” that using the e-CNY infringes on people’s privacy and turns everyone into “a little ant with GPS installed.”
Mu said the e-CNY has a “controlled anonymity” to protect user privacy while curbing its use for illegal activities like money laundering and terrorist financing. He adds that a user’s personal information could only be accessed by authorities when illegal transactions are suspected to have taken place.
Richard Turrin, the author of ‘Innovation Lab Excellence’ and ‘Cashless’, a book on China’s digital currency revolution, addressed a similar concern regarding users of the CBDC being under surveillance. Turrin, in his chat with Edward Tse, the founder of Gao Feng Advisory Company to outline what the e-CNY has in store for China and elsewhere, said people be concerned about it but not afraid.
“CBDCs are software. You can build good software and you can build bad software,” he says. “The accusation is always the same. China’s CBDC, the digital Yuan, or the digital RMB is nothing more than spyware or spy software. And the answer is really funny. China’s CBDC offers greater privacy and anonymity than all of your credit cards or digital payment forms in the West, including Visa and Mastercard.”
He added that the complete anonymity enjoyed with the e-CNY for payments of around $300 makes it a better option than the Visa and Mastercard system, as well as WeChat Pay and Alipay which have no presumption of anonymity too.
While the European Digital Euro project and the Digital Dollar project in the US are planning systems that do not have a database with users’ personal details, he argues that a judge could be sought to unmask a user’s identity if the need arises like the process with using credit cards and bank accounts.
“I understand that people are afraid as they may have read terrifying things, but it just isn’t true. This is software. We can make and build privacy in there. It won’t be perfect. It won’t keep everyone happy. But it will be more private than credit cards in the digital payment systems that you have in the West today.”
e-CNY Not Here to Kill Alipay and WeChat Pay
Contrary to the view that China built the CBDC to punish the country’s payment giants, Alipay and WeChat Pay, Turrin says it is objectively not true as the DCRI – which started the e-CNY concept – had been founded in December 2013 when both payment platforms came into existence. He argues that the CBDC will co-exist peacefully with WeChat and Alipay in China for their “user stickiness” as well as with Visa and Mastercard in the West.
He cites the largeness of these platforms, their ease of use, and the ability to use the digital currency alongside WeChat and Alipay as some of the reasons for the expected co-existence – except for larger scale, high-volume payments like salaries for which the two payment platforms are not designed for. Users are also free to pick their payment method, depending on what they want to do, he adds.