In Part I and II of our e-CNY series, we discussed the key players driving this digital currency’s development and the direction of its core technology, respectively. (The Interconnected research team compiled all of the People’s Bank of China’s Digital Currency Research Institute’s patent filings into a publicly viewable Google Sheet.)

In this Part III post, we will look at the e-CNY’s strategic value and implications, both domestically and internationally.

Domestic: Open Ecosystem, Closed Backend

Domestically, e-CNY is looking to become the common, infrastructure backend of China’s entire digital financial system. This movement comes at a time when China’s tech industry is moving from a “walled garden” landscape to an open ecosystem that will nonetheless be based on a closed, CeFi (centralized finance) project that is the e-CNY.

This landscape shift is quite monumental and worth underscoring.

From the outside, China often looks like a monolith. From the inside, it's anything but that, especially its technology sector. Until very recently, China’s tech giants have built their empires on a “walled garden” approach, intentionally not playing well with each other. As a user, you cannot post a link from an Alibaba-owned platform (e.g. Taobao, Ele.me) on the Tencent-owned WeChat. UnionPay, the state-owned interbank network and payment card service, does not work interoperably with AliPay or WeChat Pay. Relative newcomers like ByteDance must create their own “walled gardens” to succeed, knowing that their links and content would not be welcomed on other platforms.

The walls are coming down and the ecosystem is opening up -- and opening up rapidly. After a series of antitrust policy changes and fines (so far on Alibaba, Tencent, Didi, and Meituan), the Ministry of Industry and Information Technology (MIIT) directed all the tech giants in mid-September to open up to each other. In a matter of a few weeks, WeChat Pay started appearing on Alibaba-owned services, both WeChat and AliPay are playing nice with UnionPay, and you can now share Taobao (Alibaba-owned) or Douyin (ByteDance-owned) links in your WeChat messages.

These seemingly trivial-looking changes were unthinkable five years ago. More importantly, the ministry driving all these changes, the MIIT, also has a seat at the table in the development of the e-CNY, as we noted in Part I.

As these tech platforms open up, what will likely happen is all transactions will eventually be tracked, processed, and controlled using e-CNY. That won’t happen overnight, as the e-CNY is still a young, untested project with technology, product, and reputational challenges. But that is the long-term direction.

There’s an interesting dichotomy evolving here of an ever-opening ecosystem being built on a closed and centralized digital backend. An open ecosystem tends to be better for consumers, merchants, and new startups, while also making top-down government control easier to execute (no big tech becomes too big to control). That’s why we are witnessing a flurry of Chinese government tech policy changes in the last few months. But an ecosystem that is too open also produces more illicit activities, financial crimes, scams, and capital flight -- a problem that China has been uniquely concerned about for many years. UnionPay did a poor job of preventing capital flight; e-CNY seeks to close those enforcement loopholes.

The interoperability among Chinese tech giants is happening at an accelerated pace and will likely be completed next year before the 20th Communist Party Congress in October 2022. How quickly the e-CNY will mature as the common backend is harder to predict. There are two important milestones of adoption to watch:

  • Singles Day: How much transaction volume the e-CNY will facilitate during this year’s Singles Day, China’s annual online shopping holiday, will be an important short-term metric to watch. JD.com has committed to accepting e-CNY payments, but other e-commerce platforms have not, as far as I know. This lack of adoption may be intentional, because e-CNY is too brittle to handle Singles Day peak traffic. This year’s launch on November 1 already crashed Taobao for 20 minutes, and Alibaba’s cloud infrastructure team is one of the best-trained teams in the industry to handle traffic surges. It’ll be a while before the e-CNY’s infrastructure team reaches that caliber.
  • Lunar New Year: the next Lunar New Year is on February 1, 2022, when red packet exchange will be at its height. e-CNY-based digital red packets are already being piloted in major cities like Shanghai. How successfully the PBOC can use this uniquely-Chinese product launch playbook will be the next milestone in e-CNY’s domestic adoption journey. WeChat Pay pioneered this “red packet to payment gateway” playbook to perfection during the 2014 Lunar New Year; will e-CNY be able to replicate that success with PBOC’s backing?

International: Global Inter-Bank Settlement Layer

Three days after Lunar New Year is when we will get to observe the first sign of e-CNY’s international ambition: the 2022 Winter Olympics taking place from February 4 - 20. This global event is a natural, if not "sneaky", vector for the e-CNY to internationalize the RMB and chip away at the US Dollar’s dominance.

e-CNY’s Winter Olympics rollout has been frequently, though superficially, reported. What’s missing in the narrative is which countries will most likely take China up on this offer and why. Given that most countries strong in winter sports are wealthy Western or East Asian nations, many of whom are skeptical of China’s intentions, e-CNY adoption from their athletes will be low.

However, countries with high crypto adoption rates are mostly emerging economies. According to the 2021 Geography of Cryptocurrency Report compiled by Chainalysis, among the top 10 countries in the crypto adoption index (see below), 8 are lower-middle-income countries or below. The US is #8 and China is #13. (Note: this report was compiled before China’s blanket prohibition on Bitcoin and other cryptocurrencies in September.)

Source: 2021 Geography of Cryptocurrency Report compiled by Chainalysis

Given that cryptocurrency traction tends to be deeper in poorer countries with weak, untrustworthy financial institutions, the athletes who would download the e-CNY wallet and take it back home would come from countries that won’t garner much attention at this, or any, Winter Olympics. In other words, it won’t be your high-flying Canadian hockey team, but your misfit Jamaican bobsled team.

Cool Runnings (1993), a classic sports comedy about the Jamaican national bobsled team

It is important to not conflate e-CNY, a project that uses limited blockchain features, with cryptocurrency projects, like Bitcoin, Ethereum, and many (many) others, where the blockchain is at the core of their functionalities and value propositions. Based on the PBOC press conference on its e-CNY development progress held in July, the Digital Currency Research Institute is cherry-picking blockchain concepts like consensus mechanism, programmability, smart contract, and data separation (to reduce security risks).

Thus, a high crypto adoption rate does not guarantee acceptance of another country’s Central Bank Digital Currency (CBDC) like the e-CNY, but it does make the marketing conversation easier.

Regardless of how “blockchain” is the e-CNY, the PBOC is no doubt positioning the project as yet another attempt to “internationalize” China’s currency. This is a long-held ambition with many false starts, most recently in 2015 when the PBOC launched the Cross-Border Inter-Bank Payments System to mute response. Not so coincidentally, soon after that failed launch, the Digital Currency Research Institute was established.

Fully achieving this lofty goal will take more than one Olympics to build the global network effect and trust necessary. The Beijing Winter Olympics is just the end of the beginning of e-CNY’s own Long March beyond its border.

No Prior Art

The e-CNY’s strategic value and implications, both domestically and internationally, are ambitious and will take many years to realize. So far, the Chinese government has proven its ability to both plan and execute on a multi-decade time horizon. But this e-CNY project is materially different from China's past achievements -- there is no prior art from the West to illustrate what success looks like.

China’s economic growth from the last four decades was largely predicated on the assumption that there is always some valuable information to transfer or successful Western models to emulate. These often-forced transfers have come in the form of technology, intellectual property, managerial and operational best practices, and raw overseas talent.

This assumption falls apart when it comes to the e-CNY. The US is still figuring out what a stablecoin is and which government agency should regulate it. Countries with somewhat mature CBDC projects of their own, like Cambodia and the Bahamas, are hardly economic success stories worth modeling. The e-CNY is breaking new ground, and its success or failure rests on whether China can attract or develop creative, elite-level technical talent to build it.

In this regard, China has already shot itself in the foot by becoming a hostile environment for technical talent with its blanket crypto ban. Although you can argue that because there’s no prior art from the West, foreign talent is no longer worth attracting. But ask anyone who’s working in or investing in Silicon Valley right now, and 8 out of 10 people will tell you the brightest, most ambitious technical talents are working on (or trying to work on) crypto projects. None of them will want to build anything in China, while the e-CNY will have to rely on domestic talent to fill its org chart.

As we noted in Part I of this series, the crypto tech talent gap in China is huge and only being filled by opportunistic programs by second and third-tier universities. No offense to my friends in Sichuan, but a four-year blockchain bachelor’s degree from the Chengdu University of Information Technology is not going to cut it.

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e-CNY: 战略价值和影响

在《互联》e-CNY系列的第一和第二篇中,我们分别讨论了推动此数字货币发展的关键玩家其核心技术的走向。(《互联》研究团队已经将央行的数字货币研究所申请的所有专利编入到了一个可公开查看的谷歌列表里。)

在e-CNY系列的第三篇中,我们将探讨e-CNY在国内和国际上的战略价值和影响。

国内:开放生态,封闭后端

在国内环境中,e-CNY正在寻求成为中国整个数字金融系统的通用基础设施后端。这一走向正发生在中国科技行业从 "围墙花园" 的格局转向开放生态的大环境下,虽然e-CNY本身是一个封闭的集中式数字金融项目。

这个大格局转变值得强调和深思。

在外界看来,中国往往像是一个统一的单体。从内部来看,它却不是这样的,特别是科技行业。直到最近,中国的科技巨头们一直在 "围墙花园" 的基础上建立自己的帝国,彼此之间并不融洽。作为一个用户,你不能在微信上发淘宝网或饿了么的链接;支付宝和微信支付一直和银联格格不入,互相使用的体验很差;像字节跳动这种相对的“新星”必须创建自己的 "围墙花园" 才能成功,它知道自己的链接和内容不会受到其他平台的欢迎。

墙正在倒下,生态正在开放,而且速度极快。在一系列反垄断政策改革和惩罚(迄今为止对阿里、腾讯、滴滴和美团)之后,工信部在9月中旬指示所有科技巨头相互开放。在短短几周内,微信支付开始出现在阿里旗下的网站上,微信支付和支付宝都在与银联打通,微信用户也终于可以分享淘宝或抖音的链接了。

这些看似微不足道的变化在五年前是不可想象的。更重要的是,正如本系列第一篇中指出的,工信部在e-CNY的发展中也有一席之地。

随着各大平台的开放,未来的情况很有可能是所有交易最终都将使用e-CNY来跟踪、处理和控制。这不会在一夜之间发生,因为数字人民币仍然是一个年轻的、未经考验的项目,还有很多技术、产品和声誉方面的挑战。但这是长期的大方向。

一个开放的生态建立在一层封闭集中的后端上,是一个耐人寻味的演变。一个开放的生态往往对消费者、商家和创业公司更有利,同时也使自上而下的政府监管更容易执行(没有巨头会大到无法控制)。这就是为什么我们在过去几个月里目睹了政府科技政策的一系列变化。但是一个过于开放的生态也会产生更多的非法活动、金融犯罪、诈骗和资本外逃——这是中国多年来一直尤其关注的问题。银联在防止资本外逃方面做得很差;e-CNY旨在填补资本外逃的漏洞。

中国科技巨头之间的兼容性正在加速进行,很可能在明年二十大召开之前完成。但e-CNY需要多长时间成熟,并成为通用的后台基础科技,就很难预测了。有两个重要的用户使用里程碑值得关注:

  • 双十一:在今年的双十一期间,e-CNY能处理多少交易量,将是一个重要的短期指标,值得关注。京东已经承诺接受e-CNY支付,但是据我所知,其他电商平台还没有。没有广泛接受可能是有意的,因为e-CNY可能还太脆弱了,无法扛住双十一的流量洪峰。11月1日双十一launch已经让淘宝当掉了20分钟,而阿里的云基础设施团队是业内训练最有素的团队之一,处理流量洪峰已经是身经百战。e-CNY的团队要达到这种水平还需要一段时间。
  • 春节:春节期间发红包将达到高潮。基于e-CNY的数字红包已经在上海等主要城市开始测试。央行如何成功地使用这套有中国特色的产品launch手法,将是e-CNY在国内成败的下一个里程碑。微信支付在2014年春节完美地利用红包开创了这一玩法;有央行支持的e-CNY能否复制这一成功?

国际:全球银行间结算层

初一过后三天,就可以亲眼观察e-CNY国际野心的第一章了。北京东奥会将在2月4日至20日举行,这一全球活动是e-CNY把人民币推向国际化的一个自然渠道。

e-CNY在冬奥会进行推广的这一新闻已经得到了充分的报道,但报道中缺少的是哪些国家最有可能接受e-CNY,以及背后的原因。鉴于大多数冬季运动强国都是富裕的西方或东亚国家,其中许多国家对中国的意图持怀疑态度,它们的运动员采用e-CNY的可能性会很低。

然而,加密货币采用率高的国家大多是新兴经济体。根据Chainalysis发表的2021年加密货币地理报告,在加密货币采用指数排名前10的国家中(见下表),有8个是中低收入国家或以下的。美国排第8位,中国排第13位。(注意:此份报告是在中国9月全面禁止比特币和其他加密货币之前写的。)

来源: 2021 Geography of Cryptocurrency Report compiled by Chainalysis

鉴于加密货币的吸引力往往在金融机构薄弱、不值得信赖的穷国更深,下载数字人民币钱包并将其带回本国的运动员将来自那些在本届,或任何一届,冬奥会上都不会获得太多关注的国家。换句话说,不会是强大的加拿大冰球队,而是奇葩的牙买加雪橇队。

Cool Runnings (1993), a classic sports comedy about the Jamaican national bobsled team

值得一提的是,不要把e-CNY这个使用有限区块链功能的项目与其他加密货币项目混为一谈,比如比特币、以太坊和许多(许多)其他项目。这些项目是以区块链的本质功能和价值为核心的。根据中国人民银行在7月举行的关于其电子人民币开发进展的新闻发布会,数字货币研究所正在挑选区块链概念,如共识机制、可编程性、智能合约和数据分离(以减少安全风险)。

无论e-CNY使用 "区块链" 有多深,央行无疑将该项目定位为人民币 "国际化" 的又一次尝试。这是一个长期的大目标,过去有许多次尝试和失败,最近一次是在2015年,央行推出的“跨境银行间支付清算系统”(CIPS),当时市场回应很一般。并非巧合的是,在那次失败之后不久,数字货币研究所就成立了。

彻底实现这一大目标需要不止一届奥运会来搭建必要的全球网络效应和信任,北京冬奥会只是e-CNY出海“长征”的开始。

没有先例

e-CNY的战略价值和影响,无论是在国内还是国际上,都是雄心勃勃的,需要多年打磨才能实现。到目前为止,中国政府已经证明自己有能力在多年的长期时间范围内进行规划和执行。但是,这个数字货币项目与中国过去的发展成就有实质性的不同——它没有西方先例来证明成功会长什么样子。

中国过去四十年的经济增长在很大程度上是建立在这样的假设上:总会有一些有价值的知识可以从西方国家转让,或有一些西方成功模式可以对标。最终被转让的东西各种各样:技术、知识产权、管理和运营的最佳实践以及海外人才。

当涉及到e-CNY时,这种假设就不成立了。美国还在摸索啥是稳定币(stablecoin),哪个机构应该监管它。像柬埔寨和巴哈马这种自己也有中央银行数字货币项目的国家,并不是值得效仿的经济成功案例。e-CNY正在开辟新天地,它的成败取决于中国是否能吸引或培养有创造力的精英技术人才来建设它。

在这一点,中国已经搬起石头砸了自己的脚。政府在九月份对所有加密币的全面禁令使国内变成了一个对加密货币技术人才极不友好的环境。虽然可以说,由于没有西方的成功先例,也就没有必要吸引国外人才。但随便问任何现在在硅谷工作或投资的人,10个人中有8个人会告诉你,最聪明、最有抱负的技术人才正在从事(或试图从事)与加密货币有关的项目。他们中没有人愿意在中国做事情,而e-CNY也就不得不依靠国内人才来填补其团队。

正如在本系列第一篇中提到的,中国的加密币技术人才缺口很大,而且目前只由二、三线大学的一些 “投机” 学位来培养、填补。无意冒犯我在四川的朋友们,但是就指望成都信息科技大学的区块链本科学位,给加密币技术输送人才,是远远不够的。

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