Authenticated Digital Currency Redaction with Stronger Privacy and Usability

With the promotion of digital currency,how to effectively solve the authenticity,privacy and usability of digital currency issuance has been a key problem.Redactable signature scheme(RSS)can provide the verification of the integrity and source of the generated sub-documents and solve the privacy problem in digital currency by removing blocks from the signed documents.Unfortunately,it has not realized the consolidation of signed documents,which can not solve the problem of merging two digital currencies.Now,we introduce the concept of weight based on the threshold secret sharing scheme(TSSS)and present a redactable signature scheme with merge algorithm(RSS-MA)using the quasi-commutative accumulator.Our scheme can reduce the communication overhead by utilizing the merge algorithm when transmitting multiple digital currency signatures.Furthermore,this can effectively hide the scale of users’private monetary assets and the number of transactions between users.While meeting the three properties of digital currency issuance,in order to ensure the availability of digital currency after redacting,editors shall not remove the relevant identification information block form digital currency.Finally,our security proof and the analysis of efficiency show that RSS-MA greatly improves the communication and computation efficiency when transmitting multiple signatures.

The Digital Currency of China’s Central Bank:Digital Currency Electronic Payment(DCEP)

DCEP is the Chinese version of Central Bank Digital Currency(CBDC).It is the only legal digital currency in China and meets four conditions:(a)it is issued by the central bank;(b)it is digitized;(c)it is account and wallet based;(d)it is oriented towards the general public.As a retail central bank digital currency,it has three main technical features:a“tiered limit arrangement”(small-scale payments can be made anonymously while large-scale payments cannot),a“two-tier operating system”(as with the central bank-commercial bank traditional model),and a“dual offline payment system”(supporting both parties of the transaction).Compared with CBDCs in other countries,China’s DCEP has smaller economic impacts,more obscure strategic goals,and more scarce technical details.But its progress in testing is ahead of central banks of other countries.This article is based on public information and is intended to explain what DCEP is and why and how it was developed.It also offers suggestions for future research.

Central bank digital currency,loan supply,and bank failure risk:a microeconomic approach

Central bank digital currencies(CBDCs),which are legal tenders in digital form,are expected to reduce currency issuance and circulation costs and broaden the scope of monetary policy.In addition,these currencies may also reduce consumers’need for conventional demand deposits,which,in turn,increases banks’loan provision costs because deposits require higher rates of return.We use a microeconomic banking model to investigate the effects of introducing an economy-wide,account-type CBDC on a bank’s loan supply and its failure risk.Given that a CBDC is expected to lower the cost of liquidity circulation and become a strong substitute for demand deposits,both the loan supply and the bank failure risk increase.These increases are countered by subsequent increases in the rates of return on term deposits and loans,which,in turn,reduce the loan supply and thus bank failure risk.These offsetting forces lead to no significant change in banking,as long as the rate of return on loans is below a certain threshold.However,once the rate is above the threshold,bank failure risk increases,thereby undermining banking stability.The problem is more pronounced when the degree of pass-through of funding costs to the loan rate is high and the profitability of a successful project is low.Our results imply that central banks wishing to introduce an economy-wide,account-type CBDC should first monitor yields on bank loans and consider policy measures that induce banks to maintain adequate liquidity reserve levels.

Economic uncertainty,central bank digital currency,and negative interest rate policy

The covID-19 outbreak has brought unprecedented social attention to economic uncertainty and negative interest rate policy(NIRP).How does uncertainty affect economic activity,and how effective is a NIRP based on central bank digital currency(CBDC)?To answer the two questions,we constructed a dynamic stochastic general equilibrium(DSGE)model that accommodates sticky prices and wages.The results indicated:(i)Economic uncertainty has substantially reduced investment,output,wage,and loans,which increases unemployment risk.In the short term,it has triggered impulsive consumption by households,while consumption has fallen into a slump in the long run.(ii)After suffering an uncertainty shock,the economy entered short-term stagflation and long-term deflation.The short-term stagflation was mainly caused by resident wage adjustment,and the long-term deflation was due to the decline in effective demand caused by unemployment risk.(ii)CBDC could eliminate the zero lower bound(ZLB)constraint,thereby improving the effectiveness of NIRP.Compared with traditional currency,CBDCbased NIRP could more effectively smooth macroeconomic fluctuations and alleviate the negative impact of an uncertainty shock,which is more conducive to restoring market confidence and promoting economic recovery.

On the Legal Attributes of Digital Currency

Digital currency has been widely used ever since the concept of Bitcoin was formulated.It uses blockchains as its underlying technical support and is characterized by decentralization,programmability,and security verification based on the principles of cryptology.Generally speaking,theories on the legal attributes of digital currency regard it either as nonmonetary property or as currency.The former theory can be subdivided into theories on digital currency as commodity,as securities or as data.All of these subdivisions present insurmountable theoretical difficulties and practical obstacles.If we return to the substantive nature of currency as a generally accepted accounting symbol,it can be seen that currency issuance by the state or a private bank is simply a means of building currency credit rather than a necessary condition.Unlike traditional currency,digital currency relies on blockchain technology to complete the construction of decentralized currency credit.This has resulted in a new theory of currency based on the theory of digital currency.On the one hand,it offers a jurisprudential foundation for the construction of the quasi-currency attributes of digital currency;on the other,it provides a theoretical basis for the gradual improvement of digital currency legislation.We can first determine the legal attributes of digital currency as a quasi-currency and then confirm its legal position when the time is ripe.We need to confirm the legal status of digital currency as a quasi-currency through legislation,and use this as a logical starting point for the construction of a series of legal systems for digital currency as a quasi-currency.Digital currency can easily be used as a tool for crime or for evading financial controls;therefore,we need to determine a regulatory body and formulate regulatory rules.

Design of a digital currency information system based on the UnionPay network

Digital currency can reduce the issuance and circulation costs of physical cash and improve the convenience and transparency of economic activities.Therefore,digital currency has received widespread attention from central banks in recent years.As an important financial infrastructure,the UnionPay network is expected to provide effective support for the construction and operation of a digital currency system.This study uses the UnionPay network as basis to systematically propose a digital currency information system from three aspects,namely,digital currency account opening,exchange,and use,and further expounds on the operation mechanism of a digital currency information system prototype.This study also discusses how to apply blockchain technology to digital currency,such as using distributed ledger for digital currency confirmation and registration and using blockchain-enabled smart contracts to realize the forward guidance function of the central bank digital currency.Lastly,the current research introduces the value of using the UnionPay network to support the operation of a digital currency information system and its technical challenges,aiming to provide beneficial guidance and reference for future research effort.

Fintech,Digital Currency,and the Restructuring of the Global Financial System

Financial technology(fintech)and digital currency are irreversibly reshaping the global financial system.Through the analysis of the development of fintech and digital currency,and the resulting major influences on the global financial system,this paper discusses the impact of issuing legal digital currency on a monetary base and money multiplier,and the possible influences on central banks’monetary policies.It shows that the integration of artificial intelligence,big data,cloud computing,the Internet of Things and other information technologies with traditional finance will greatly enhance the efficiency of financial service,and help to identify,quantify and minimize financial risks,and reinforce the financial agglomeration effect of traditional financial centers.At the same time,the development of digital currency entirely based on blockchain technology may weaken the financial agglomeration functions of traditional financial centers.The development of private digital currency based on blockchain is unstoppable,thus the legal digital currency of the People’s Bank of China will play an important role in restructuring the global currency framework.Taking advantage of the internet financial market,China should strengthen its infrastructure in fintech,promote integrated innovation,increase research spending on core technology,and tighten top-level design and regulation,so as to advance a faster development of fintech and digital currency.

Transactional Network Analysis and Money Laundering Behavior Identification of Central Bank Digital Currency of China

With the gradual application of central bank digital currency(CBDC)in China,it brings new payment methods,but also potentially derives new money laundering paths.Two typical application scenarios of CBDC are considered,namely the anonymous transaction scenario and real-name transaction scenario.First,starting from the interaction network of transactional groups,the degree distribution,density,and modularity of normal and money laundering transactions in two transaction scenarios are compared and analyzed,so as to clarify the characteristics and paths of money laundering transactions.Then,according to the two typical application scenarios,different transaction datasets are selected,and different models are used to train the models on the recognition of money laundering behaviors in the two datasets.Among them,in the anonymous transaction scenario,the graph convolutional neural network is used to identify the spatial structure,the recurrent neural network is fused to obtain the dynamic pattern,and the model ChebNet-GRU is constructed.The constructed ChebNet-GRU model has the best effect in the recognition of money laundering behavior,with a precision of 94.3%,a recall of 59.5%,an F1 score of 72.9%,and a microaverage F1 score of 97.1%.While in the real-name transaction scenario,the traditional machine learning method is far better than the deep learning method,and the micro-average F1 score of the random forest and XGBoost models both reach 99.9%,which can effectively identify money laundering in currency transactions.

Impact of COVID-19 effective reproductive rate on cryptocurrency

The importance of cryptocurrency to the global economy is increasing steadily,which is evidenced by a total market capitalization of over$2.18T as of December 17,2021,according to coinmarketcap.com(Coin,2021).Cryptocurrencies are too confusing for laymen and require more investigation.In this study,we analyze the impact that the effective reproductive rate,an epidemiological indicator of the spread of COVID-19,has on both the price and trading volume of eight of the largest digital currencies—Bitcoin,Ethereum,Tether,Ripple,Litecoin,Bitcoin Cash,Cardano,and Binance.We hypothesize that as the rate of spread decreases,the trading price of the digital currency increases.Using Generalized Autoregressive Conditional Heteroskedasticity models,we find that the impact of the spread of COVID-19 on the price and trading volume of cryptocurrencies varies by currency and region.These findings offer novel insight into the cryptocurrency market and the impact that the viral spread of COVID-19 has on the value of the major cryptocurrencies.

Is money going digital? An alternative perspective on the current hype

Current financial discourse suggests the imminence of a cashless society,a concept that arose from the global popularization of digital financial services and the development of technologies with the potential for application in financial markets.However,claims about the impending obsolescence of paper money are neither disruptive nor a novelty.Instead,this paper argues that the conversion of money from paper to bits has been a gradual,adaptive process,and that money is already digital.Moreover,in this paper we propose that the statuses of electronic money(e-money)and banknotes have switched in the view of monetary authorities.

从监管视角分析中央银行数字货币与私人加密货币的竞争均衡

This paper constructs a searching model to study the impact of monetary policy,fiscal policy,transaction costs of private cryptocurrency and regulatory uncertainty on the competitive equilibrium between Central Bank Digital Currency and private cryptocurrency.The results show:(1)Central Bank Digital Currency and private crypto-currency can conditionally coexist.(2)The level of economic welfare is related to monetary policy and fiscal policy but independent from the issuance and transaction of private cryptocurrency.(3)Under complete competition of private cryptocurrency mining,the mining cost becomes deadweight loss for whole society.

An Enhanced Security System Using Blockchain Technology for Strong FMC Relationship

Blockchain technology is a shared database of logs of all consumer transactions which are registered on all machines on a network.Both transactions in the system are carried out by consensus processes and to preserve confidentiality all thefiles contained cannot be changed.Blockchain technology is the fundamental software behind digital currencies like Bitcoin,which is common in the marketplace.Cloud computing is a method of using a network of external machines to store,monitor,and process information,rather than using the local computer or a local personal computer.The software is currently facing multiple problems including lack of data protection,data instability,and reliability.This paper aims to give the highest security for multiple user environments in cloud for storing and accessing the data in blocks.The users who are legitimate are only allowed for storing and accessing the data as like a secured block chain approach.As like the Blockchain which does not require a centralized system for transactions,the proposed system is also independent on centralized network interface.The decentralized system is developed in such a way to avoid counterfeiting.The system enables the fabricator to spend less or null resources to perform the validations for its direct operated stores.This ensures the product fabricator to avoid the circulation of its duplicate products.The customer as an end-user is also ensured to have only the genuine products from the fabricator.The Fabricator(F),Merchant(M)and consumer(C)forms an interconnected triangular structure without allowing any counterfeiting agents in their secured cloud chain.The pro-posed approach provides the stability in the security system of the cloud using the chaining mechanism within different blocks at each node.It takes roughly 4.7,6.2,and 7.5 ms,respectively,to register each node in the proposed system for 5,10,and 15 nodes.The overall registration time for each scenario is 11.9,26.2,and 53.1 ms,despite the fact that each node’s registration time was greatest for 10 nodes.By looking at the data,it’s clear that the number of nodes is a func-tion of time.

Consumer choices under new payment methods

This study suggests a payment portfolio model that includes new payment methods that have emerged from the development of cryptocurrency markets and central bank digital currencies(CBDCs).Our model analyzes the optimal payment choice for consumers under various macroeconomic conditions.We determine that an individual economic agent chooses payment methods under specific conditions by incorporating policy interest rates on CBDCs and stablecoins used on cryptocurrency exchanges.We analyze the impacts of CBDCs and stablecoins on the choice of whether to use cash or deposits.We also examine how the agent changes her portfolio compositions in response to exogenous macroeconomic policies.If a government replaces cash with a CBDC,the convenience of digital currency would not affect consumer choices.The higher the government’s interest rate on CBDCs,the more consumers will use CBDCs than deposits.

A new proof-of-work mechanism for bitcoin

Background:Bitcoin system,when more than 51%computing power is controlled by a single node,the block chain can be distorted maliciously.This is called 51%attack which is a well-known potential risk that could destroy the Bitcoin system.Method:The paper proves that under the current proof-of-work mechanism,computing power eventually will be centralized at a single node if miners are rational enough.Result:The paper propose a new proof-of-work mechanism that improves decentralization and reduces the risk of 51%attack without increasing the risk of Sybil attack.Concusions:This new mechanism introduces a series of principles such as Career open to all talents,without distinction of birth,Distribution according to labor and All Men are created equal.

Quantum Blockchain: A Decentralized, Encrypted and Distributed Database Based on Quantum Mechanics

Quantum blockchain can be understood as a decentralized, encrypted anddistributed database based on quantum computation and quantum information theory.Once the data is recorded in the quantum blockchain, it will not be maliciously tamperedwith. In recent years, the development of quantum computation and quantum informationtheory makes more and more researchers focus on the research of quantum blockchain. Inthis paper, we review the developments in the field of quantum blockchain, and brieflyanalyze its advantages compared with the classical blockchain. The construction and theframework of the quantum blockchain are introduced. Then we introduce the method ofapplying quantum technology to a certain part of the general blockchain. In addition, theadvantages of quantum blockchain compared with classical blockchain and itsdevelopment prospects are summarized.