Design of a digital currency information system based on the UnionPay network
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RESEARCH ARTICLE
Hongfeng CHAI, Quan SUN, Yu ZHOU, Tao ZHU
Design of a digital currency information system based on the UnionPay network
© Higher Education Press 2020
Abstract 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. Keywords UnionPay network, digital currency, information system, blockchain, smart contracts
Received June 29, 2020; accepted August 1, 2020
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Hongfeng CHAI, Quan SUN ( ) Fudan University, Shanghai 200433, China; China UnionPay Co., Ltd., Shanghai 201201, China E-mail: [email protected] Yu ZHOU, Tao ZHU China UnionPay Co., Ltd., Shanghai 201201, China
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Introduction
Currency originates from the exchange of commodities and labor services, and it has the credit deflation function of economic regulation in the modern economy. Given the progress of the economy and technology, the form and function of currency have continuously extended and evolved, which has experienced three stages, i.e., physical, credit, and electronic currencies. Physical currency in the first stage is the initial form of currency, which is the relatively primitive equivalents of cattle, sheep, grains, and shells, among others; and the general equivalents of bronzes, jade, gold, and silver. Given the low extent of portability and standardization, physical currency is difficult to popularize on a large scale. The second stage of credit currency is real currency (Qiu, 2017), which is based on private and countries’ credit intermediaries, in the form of bills and banknotes and with three advantages: Convenience, standardization, and popularization. Since the 1980s, the rapid development of information and Internet technology has made currency enter the third development stage, namely, electronic currency, which is the expression of credit currency from the physical form to electronic form (Shi and Zhou, 2018). Electronic payment requires commu
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