According to a recent report by SCMP, China has incorporated SenseTime, the most valuable AI startup in the world into its digital currency project. The company will offer its high-end technology to the team working on the creation and release of China’s digital currency throughout China.
The Role of AI in the Chinese Digital Currency
According to the SCMP report, SenseTime signed an agreement with the Digital Currency Research Institute, which operates under the Chinese central bank. The institute is responsible for developing the DC/EP.
SenseTime, which is based in Hong Kong, is best known for the use of its technology is facial recognition. It is also the engine, which powers Weibo, the popular Chinese microblogging site. Besides that, Huawei, a leading technology company, uses SenseTime technology.
The Chinese digital currency is already in the beta testing phase. Various companies, including global restaurant chain stores have been included in the test. The test is being carried out in the city of Xiong’an, a new city that is south of Beijing. Other regions included in the study are Shenzhen, Suzhou, and Chengdu. The beta test will begin in May and it will be used to pay for goods as well as travel reimbursements for local government employees.
How the Digital Currency Will Work
For now, China is going to focus its effort on launching the DC/EP within China. It is unlikely that it will face difficulties convincing residents to adopt the digital currency. The reason for this is that the use of digital payments is already quite popular. What will be different about this system is that the Chinese central bank will have direct control over the whole system. In other words, the issuance of the digital currency will operate through a centralized model. The central bank will issue the digital currency to various commercial banks in the country. Besides that, various digital payment providers such as Alibaba’s Alipay and WeChat will also be involved in the distribution of the DC/EP. It is worth noting that one of the major investors in SenseTime is Alibaba.
Handling of Data from DCEP
There have been concerns about how data generated by the digital currency will be managed. According to a recent report by Huatai Securities, the data will be managed by three centers. The first center will handle the use of the DC/EP; the other one will handle the registration of citizens into the digital currency network. Finally, the third one will be responsible for analyzing the data generated by the system.
The technology developed by SenseTime will likely be used to analyze the data generated. With such an analysis, it could help to deal with issues such as terror financing and money laundering. Since all the money remains within the system, it will be much easier to deal with criminal mischief within the financial system.
Thus far, the exact role that SenseTime will play is not known. The inclusion of AI into the DC/EP will no doubt be a major boost to the Chinese digital currency. In the future, it could help China expand the DC/EP globally with ease.
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