Digital RMB is coming. What is digital RMB? How to implement dual offline payment technology?

“As long as you and I have digital RMB digital wallets on our phones, we don’t even need an internet connection. As long as our phones have power, we can transfer them by touching them. The digital currency in one person’s digital wallet is transferred to another person.

Isn’t it amazing? We are accustomed to the era of various network connections. Doesn’t this offline payment technology feel quite advanced?

Recently, the Shenzhen Municipal People’s Government and the People’s Bank of China launched a digital RMB red envelope pilot. As a technician, I want to know how to achieve dual offline payment, and also want to understand what this digital RMB is?

1. What is digital RMB?

Digital RMB is issued by the People's Bank of China and is a legal currency with national credit endorsement and legal solvency.

Compared with virtual currencies such as Bitcoin, the digital renminbi is a legal currency and has the same value as legal currency. Its effectiveness and security are the highest. However, Bitcoin is a virtual asset without any value basis. It also does not enjoy any sovereign credit guarantee and cannot guarantee value stability. This is the most fundamental difference between central bank digital currency and crypto-assets such as Bitcoin.

1. Dual offline payment. Like banknotes, it can meet the electronic payment needs of places with poor network signals such as airplanes, cruise ships, and underground parking lots;

2. Higher security. If acts such as theft really occur, digital RMB can provide a loss report function for real-name wallets;

3. Multiple terminal options. People who are unwilling or unable to use smartphones can choose IC cards, feature phones or other hardware;

4. Multi-information intensity. Digital RMB wallets are divided into several levels according to the intensity of grasping customer information. Such as large-amount payments or transfers, they must go through a real-name wallet with high information intensity;

5. Point-to-point delivery. Through digital currency smart contracts, fixed-point delivery can be achieved. People's livelihood funds can be distributed to people's digital wallets, thereby eliminating the possibility of false claims, interception and misappropriation;

2. Digital RMB and electronic wallets such as Alipay and WeChat have What's the difference?

The first point is that no institution or individual may refuse to accept digital RMB legal currency, and WeChat Pay and Alipay are just one payment method.

For example, if you are shopping and paying in a mall, do you think you can pay with WeChat? The store owner tells you that no, I only support Alipay, and there is nothing you can do about it. But it’s different when you pay with digital renminbi. If the store owner doesn’t accept it, you can call the police directly.

The second point is that third-party Internet payments such as Alipay and WeChat Pay require devices to be connected to the network for settlement, but digital RMB can be used offline. In other words, as long as the mobile phone has power, digital renminbi payment can be achieved even if the entire network is disconnected.

PS: Nowadays, Alipay and other technologies can actually implement single-offline technology, which means that there is no network signal on the mobile phone. When the consumer terminal is connected to the Internet, consumption can actually be carried out, and the consumption is completed. In the future, deferred settlement will be carried out, and after you are connected to the Internet, there will be a text message to notify you of successful consumption. But what must be ensured is that the consumer terminal is connected to the Internet.

The third point is that third-party Internet payments such as Alipay and WeChat Pay belong to commercial bank deposit currency settlement, while digital renminbi belongs to cash in circulation.

To put it simply, when you use the central bank’s digital currency to pay, what you spend is digital RMB, just like spending cash; Alipay and WeChat Pay are just payment tools. Through these two channels, what you spend is the balance in your bank card. Or it was a credit card.

3. What is the principle of dual offline payment technology finally realized by digital RMB? What advanced technology is there?

This is what I think is the most amazing thing. How can the security of digital renminbi be achieved through dual offline technology?

In fact, the function of offline payment is not new. WeChat and Alipay have already implemented it, which allows us to "enjoy now and pay later" in some scenarios. However, this kind of offline payment generally only allows the payer to go offline, while the payee must be online, and the offline payment information is transmitted to the platform server for verification. So how is DC/EP’s “dual offline payment” implemented? According to Alipay, which participated in DC/EP, in a scenario where both the payer and the payee are offline, the account will be recorded first, and the payment will be deducted after security verification.

However, "dual offline payment" also faces higher security risks. Someone may use the time difference to do evil, such as spending the same digital currency several times. In reality, this is a cloned counterfeit currency. As long as the core data of digital currency is copied in the online world, this is what the industry calls the "Double Spending Problem" (Double Spending). This is our biggest concern about safety.

In order to prevent "double spending", third-party payment platforms need to verify each transaction, but "double offline payment" cannot be verified at the first time, so it is generally only used for small businesses such as buses. payment scenarios to reduce risks.

4. Dual offline payment application scenarios and principles

Dual offline payment core refers to the one that completes business when both the medium and the acceptance terminal are offline. The most typical process is payment business and identity verification. For the payment business, it completes the closed-loop transaction process through deferred payment after the transaction is completed. The core is a technical solution that achieves rapid verification and payment.

Its business mechanism has two core points. One is that the business mechanism has two features, including core and payment; the other is that there is a trust mechanism between the terminal and the medium. There are three dimensions in the transaction security mechanism: (1) One is the risk control limit, which is the limit of transactions after double offline; (2) The second is that there will be an advance and recovery mechanism; (3) The third is credit system.

5. Is the touch payment of digital RMB safe? Could someone just touch my phone and steal my money?

The answer is, definitely not.

The technology behind the digital renminbi’s touch-and-click payment is actually NFC technology, which is much safer than QR code scanning.

NFC is a short-range high-frequency wireless communication technology. The NFC transmission distance is less than 10 centimeters and uses point-to-point communication without the need for third-party equipment to relay transmission signals. NFC mobile phones support chip hardware encryption and software encryption, and can complete point-to-point encrypted communication in less than 0.1 seconds, ensuring payment security.

6. Will payment be made directly by just touching the phone?

Of course, you will not pay directly by touching your phone. After touching it, you have to enter the payment amount, payment password or fingerprint to complete the transfer. The steps are similar to the current scan code payment. There is no doubt that it is more convenient than scanning QR code to pay. Scanning QR code to pay cannot complete the payment if the network is poor or the light is poor. As long as it is within 10 centimeters and touched, the payment can be completed. Its payment experience and security are better than scanning QR code to pay.

7. Are there any similar cases of dual offline technology?

We understand that when both the payer and the payer are offline, the account will be recorded first, and then the payment will be deducted when security verification is done.

Think about it, is this the same situation in the bus system? There is money in the bus card, and you can swipe the card to get on the bus without the Internet.

By analogy, when the network conditions are good, the amount is first recharged into the carrier, IC card or mobile phone, and then the card can be swiped online or offline based on IC technology or NFC technology. It is easier to understand if you swipe your card online, but swiping your card offline is nothing more than waiting for the network to be connected and further settling with the center.