How Do We Pay Without Network?

"The diagram below shows a solution when the payer and payee are offline.

This is part of China's retail CBDC (Central Bank Digital Currency) solution. It works like paying with banknotes offline.

As long as the two mobile phones have enough battery power, they can transfer money in real time via NFC (Near-Field Communication).

Step 0️⃣ - The users can set up digital wallets on their cell phones. The smartphone on which the wallet software is installed must support a trusted execution environment (TEE).

Each user account can only be bound to one wallet and can only be activated on one smartphone. When activated, the phone must be connected to the Internet and remotely authenticated by the central bank's digital currency registration system.

Step 2️⃣ - The payment receiver presents the address and payment amount to the payer.

Step 2️⃣ - The payer's wallet makes up the transaction amount from the UTXOs (Unspent Transaction Outputs) it owns. It constructs and signs the transaction message.

UTXO is a fundamental concept in Bitcoin, representing a piece of cryptocurrency that has not yet been spent. It helps maintain security and integrity within the blockchain network.

Steps 3️⃣ and 4️⃣ - The receiver's wallet verifies the digital currency's authenticity with the central bank's digital currency issuance public key. It updates the local UTXO ledger.

Step 5️⃣ - When the payee is back online, it submits the offline transactions to the central bank's digital currency registration system for bookkeeping.

Step 6️⃣ - When the cell phone is connected to the Internet, the wallet connects to the central bank's digital currency registration system for book synchronization."

Author

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