As trials continue, an ecosystem of hardware and software evolves around the e-CNY
Even as the world comes to grips with COVID-savaged economies, technologies like nascent State-backed digital currencies such as China's e-CNY are fast coming to fruition unfazed.
In the process, they are spawning whole new ecosystems spanning both hardware and software. These spell an emerging industry with immense business potential and growth prospects not only for established enterprises but innovative startups.
Shenzhen, Guangdong province-listed Julong Co Ltd, a manufacturer of cash processing machines, typifies the trend.
In 2019, the People's Bank of China, the central bank, started closed-loop testing of the e-CNY, the digital form of China's fiat currency. The process involved businesses and nongovernmental institutions. The implication was clear: China was aiming to be among the global leaders in pioneering digital currency as legal tender.
Sensing new business opportunities, the nimble Julong promptly set up a special team in 2019 to develop different types of physical wallets for the e-CNY.
That marked a sort of diversification for Julong as it was already producing machines like cash sorters, cash strapping equipment and related software.
Now, "hardware wallets" of the e-CNY represented a breakthrough product for the company. As the e-CNY's research and testing progressed, Julong's executives realized the digital currency in the making heralds a huge market, said Liu Yongquan, chairman of Julong.
The company has developed mainly three types of hardware wallets: display card hardware wallet; specially shaped hardware wallet; and SIM (subscriber identification module) card-based film digital currency wallet.
Some of these wallets look like physical bank cards. They can store and transfer the e-CNY when users put a card close to a POS (point of sale) machine. The hardware wallet is different from the "software wallet", which usually means mobile payment apps.
These innovative products of Julong take advantage of blockchain and digital security technologies, in compliance with the central bank's technology standards.