The Chinese central bank has announced that the Digital Yuan will support “smart contract programmability.” But the central bank commented that its new Digital Yuan, which is controlled by a central entity, will not work like open-source smart-contract cryptocurrencies like Ethereum.
The Digital Yuan is a Central Bank Digital Currency, which is issued by Chinese authorities. It’s very similar to FIAT currencies – but in a purely digital form. Today, it’s the largest CBDC project in the world. However, it’s only being tested and several pilots exist.
If smart contacts are enabled with the digital yuan, it could allow for automated payments and several other features. A simple example would be that you automatically pay for public transport as you enter the vehicle.
The report of the central bank said that the Digital Yuan will have privacy features:
“The e-CNY [digital yuan] system collects less transaction information than traditional electronic payment [systems] and does not provide information to third parties or other government agencies unless stipulated otherwise in laws and regulations.”
Whether or not the Digital Yuan will be private is, of course, a bold claim. However, the bank would set up “a firewall” to protect the user’s anonymity, and implement other privacy protocols.