Three Schemes for Dual Offline Payment of CBDC, Says China’s Central Bank
Compared with the digital currencies that have been issued or are being developed like Libra, the digital currency of China’s central bank is the only one that explicitly requires “dual offline payment”. China’s central bank has put forward a set of plans. ICBC (Industrial and Commercial Bank of China) has also prepared two schemes for the CBDC’s dual offline payment, one adopts blockchain and the other without.
In March 2016, the Institute of Printing Science and Technology of China’s central bank applied for a patent “Method and system for offline payment adopting digital currency chip card”.
Four years ago, China’s central bank put forward the characteristic requirements of dual-offline digital currency, including:
Security: it can prevent any party in business from changing or illegally using digital currency;
Non-repeatable spending: digital currency can only be used once, and repeated spending can be easily checked out;
Controllable anonymity: banks and businesses cannot track the use of digital currency, which requires that the system cannot link the purchase behavior of users of electronic cash, so as to hide the purchase history of users of digital currency, but the issuer of digital currency can track the use of digital currency;
Unforgeability: users cannot fake digital currency;
Fairness: the payment process is fair to ensure that either the two parties succeed in the transaction, or both parties have no loss, to prevent any transaction party from losing in the transaction;
Compatibility: the issuance process and circulation link of the CBDC system should refer to the physical currency issuance and circulation as much as possible.
ICBC (Industrial and Commercial Bank of China) has prepared two schemes to support the dual offline payment. In October 2018, ICBC applied for a patent named “off-line payment method, terminal and agent delivery equipment based on digital currency”.
According to the Patent Description, the implementation method is to send the receiving user ID, the receiving user public key and the digital certificate of the receiving user to the payment terminal. And receiving the payment user ID, the payment user public key and the digital certificate of the payment user sent by the payment terminal; If the digital certificate is within the validity period, the digital certificate sent by the receiving payment terminal is signed by the private key of the payment user.
The transaction information includes the offline digital currency paid by the payment user, the offline digital currency is encrypted by the public key of the payment user and the legality of the transaction information is verified by the public key of the payment user, and the validity of the offline digital currency is verified by the private key of the payment user if the transaction information is legal and the offline digital currency If it is effective, the payment terminal will be notified of the deduction; when receiving the notice of successful deduction sent by the payment terminal, the offline transaction record will be registered, and the offline digital currency count in the account will be increased.
The patent “reveals” the information about the digital currency. According to the Patent Description, the agent of digital currency is responsible for the assembly of such elements as currency number, face value, kind, unit, version number, forehand currency number, agent release agency identification, digital signature.
Aside from this scheme, in August 2019, ICBC applied for another patent for offline payment named “blockchain-based offline payment system and method”.
The biggest difference between this scheme and the previous one is the blockchain adoption. The main nodes of each bank constitute the blockchain backbone network, the users’ light nodes access the blockchain backbone network, encrypt and transfer information of the payer through asymmetric encryption technology to ensure the fund security and communication security. Inputting the transfer amount by the payer, asymmetric encryption and signature of the user information, transfer amount and other information by the user wallet and send them to the backbone.
Transaction verification is carried out in the network. Through the verification, the transaction information is packaged into the blockchain, and several subsequent blocks are generated to complete the transaction, which can achieve the goal of anti-tampering, thus achieving the offline fast payment in the real world.
The dual offline payment of China’s CBDC can benefit more people and apply to numerous scenarios. Regardless of the final choice, its technological exploration is unprecedented and is likely to become a global benchmark.