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How to Create Central Bank Digital Currency (CBDC) over XinFin (XDC) Network?

Started by Vinn, May 04, 2021, 04:21:55 AM

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Abbreviated from Central Bank Digital Currency, CBDCs are digital or electronic representations of national fiat currencies. Leveraging distributed ledger technologies such as blockchain, CBDCs enable central banks to increase payment efficiency while drastically lowering transaction costs.

Although similar to cryptocurrencies such as bitcoin or ether, CBDCs have substantial distinctions. While the former is mostly unregulated, CBDCs function under the governance of a nation's central financial authority. Furthermore, CBDCs are mostly stablecoins, backed by physical assets of value, such as gold or other foreign currencies; this eliminates the volatility crisis facing ordinary cryptocurrencies.

Combining these factors, then, CBDCs are more secured, efficient, transparent, and cost-minimized versions of money deposited in your bank account. In 2020, China's central bank began an experiment with digital yuan in Suzhou, Chengdu, and Xiong'an. According to its governor, Li Bo, the 'testing had shown that the issuance and distribution mechanism of the digital yuan, or e-CNY, are compatible with the existing financial system, and help minimize the impact on the banking sector.'

Following suit, the Reserve Bank of India has also expressed plans to explore CBDCs; so have Bank of England, Bank of Canada, and the central banks of Uruguay, Thailand, Venezuela, Sweden, and Singapore, among others. Against this backdrop, let us discuss how central banks can build robust CBDCs over the XinFin Digital Contract (XDC) network.

Creating CBDCs with XinFin XDC Network

Having discussed the overall benefits of using blockchains for CBDCs, and especially why central banks might prefer using XinFin, let us now look at the creation process. As such, based on the asset backing them, CBDCs can be of four broad types: fiat-collateralized, crypto-collateralized, commodity-collateralized, and non-collateralized.

While collateralized CBDCs usually have a 1:1 backing, non-collateralized ones leverage Seigniorage Shares Systems. But for each of these types, the process of creating CBDCs on XinFin is mostly similar and extremely easy. It only takes a few minutes, and the steps are as follows:

Step 1: Visit the MyContract website, to start creating your stablecoin, either on the XinFin Mainnet or the XinFin Apothem Network.

Step 2: Log in to the portal, either with XinPay or your private key.

Step 3: Enter the details of your stablecoin, such as name, symbol, supply, and so on.

Step 4: Review the details carefully; mistakes can lead to loss of funds and also credibility among potential users.

Step 5: Click on the 'Issue Token' button, and voila, your CBDC is ready for use; confirm the issuance using XinFinScan.

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