CBDC in Canada? Central Bank Identifies Technical Path for Retail CBDC in New Research Paper
The post CBDC in Canada? Central Bank Identifies Technical Path for Retail CBDC in New Research Paper appeared on BitcoinEthereumNews.com. The Bank of Canada took a significant step in exploring the technical feasibility of a digital Canadian dollar, proposing a specific system designed for a retail central bank digital currency (CBDC) focused on simple, everyday payments, according to a new research paper. The central bank’s research team examined OpenCBDC 2PC, a model developed in collaboration with the Massachusetts Institute of Technology’s Digital Currency Initiative. This design prioritizes privacy, speed and decentralization by allowing users to hold digital funds directly, much like digital cash. The new research comes after the Bank of Canada said it is shifting its focus away from a retail CBDC last year, saying that it was prepared if the people of the nation decide such a product is needed in the future. Privacy issues A major focus of the report is privacy, which isn’t a big surprise because CBDCs have sparked debate around the world, in part on concerns they could enable state surveillance of financial activity. Unlike cash, which is anonymous, a CBDC could theoretically allow a central authority to track every transaction. The report suggested that the system separates personal identity from transaction data, allowing non-registered users to hold funds in self-custodied wallets. The users could then transact without sharing their identity with a bank or payment processor. Even for registered users, the central bank would not have access to identifying information or transaction histories. The report goes further, proposing enhanced protection by potentially using cryptographic techniques such as zero-knowledge proofs to obscure transaction amounts from the core infrastructure. These features collectively offer a level of privacy that the authors say could exceed that of current electronic payment systems. Bitcoin-like structure In contrast to traditional banking systems, where money is stored in user accounts, the report suggests a design that uses “unspent transaction outputs” (UTXOs)…
The post CBDC in Canada? Central Bank Identifies Technical Path for Retail CBDC in New Research Paper appeared on BitcoinEthereumNews.com.
The Bank of Canada took a significant step in exploring the technical feasibility of a digital Canadian dollar, proposing a specific system designed for a retail central bank digital currency (CBDC) focused on simple, everyday payments, according to a new research paper. The central bank’s research team examined OpenCBDC 2PC, a model developed in collaboration with the Massachusetts Institute of Technology’s Digital Currency Initiative. This design prioritizes privacy, speed and decentralization by allowing users to hold digital funds directly, much like digital cash. The new research comes after the Bank of Canada said it is shifting its focus away from a retail CBDC last year, saying that it was prepared if the people of the nation decide such a product is needed in the future. Privacy issues A major focus of the report is privacy, which isn’t a big surprise because CBDCs have sparked debate around the world, in part on concerns they could enable state surveillance of financial activity. Unlike cash, which is anonymous, a CBDC could theoretically allow a central authority to track every transaction. The report suggested that the system separates personal identity from transaction data, allowing non-registered users to hold funds in self-custodied wallets. The users could then transact without sharing their identity with a bank or payment processor. Even for registered users, the central bank would not have access to identifying information or transaction histories. The report goes further, proposing enhanced protection by potentially using cryptographic techniques such as zero-knowledge proofs to obscure transaction amounts from the core infrastructure. These features collectively offer a level of privacy that the authors say could exceed that of current electronic payment systems. Bitcoin-like structure In contrast to traditional banking systems, where money is stored in user accounts, the report suggests a design that uses “unspent transaction outputs” (UTXOs)…
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