Central Bank Digital Currencies - how will they be constructed?

[nrvasquez]

I don't think it's going to be Blockchain or anything similar to cryptocurrency/stablecoin. I think they will build it outside that so that they can still control the currency in the internet. CBDC aim is to just replace coins or banknotes or at least make an option to use money digitally.

I think that national digital currencies will not compete with the existing cash and non-cash currencies. They should act as a different form of national currency, which will also function on a par with cash. But at the same time, the government will gain more control over its citizens.

Yeah. If this is possible, they may still be using a centralized technology system to create their currency. They certainly also have to think about other things like the stability of the currency and won't let it get out of hand

[Entei]

The control must be 100% for the benefit of the institution and the computational power must be fully monitored. However, we know that this can saturate or hinder the accession process, knowing that the population is looking for alternative decentralized means of payment or means of earnings. I believe that these governments should think about creating centralized projects in full time because the current appreciation shows the rebelliousness of the market.

[davinchi]

It will be centralized and that is the only thing we need to know about them, there is really no reason to switch from crypto that we know (coins like bitcoin, ethereum and many more) and move into something so centralized.

Central bank digital currencies will only be used to move people away from crypto currencies and into the governments hands, they will say they are digital as well and they are high tech as well and they will slowly make it more and more difficult to trade or own bitcoin and they will make it more and more supported to own cbdc so that you would think it is more profitable for you to hold cbdc and when there is enough people switching, they will just make it completely illegal to have crypto and just make it fully cbdc if they can achieve.

[Shallow]

The main feature of blockchain technology is decentralization which goes further to bring about transparency and trust, and a solid decentralized platform empowers users to own and manage their assets and private keys, so with this little idea on blockchain, I do not think Central Banks will go to such extent of using blockchain for any reason because it will remove their power over their citizens from them.  However, they will create it in such a way that it will favour them and always keep them in charge hence safe to say, there won't be any sort of transparency and so on.
Nevertheless, the only good side of this is, with them creating their own digital currencies will kind of create an awareness and will make their citizens to be aware of the crypto space in general, know about its potential, about its decentralization and so on, thereby making them to get involved.

[Tomiwa_akin]

The model will be in line with the current cyptocurrency we have but functions might differ. The ideal of dumping hard and massive uptrend movement(high volatility) would be settled out because the central authorities won't want to be experiencing such.

[leea-1334]

No one is against control, but public asset/system/network has to run publicly and not privately. A public system has to be decentralized, transparent, open, with accountability, be immutable (my post on immutablity below👇), adhere to just national laws/principles, respect people's privacy, etc..
I believe it should illegal/immoral for public system, network or assets to be run privately  like many are run today. This is can encourage corruption, lawlessness, no checks and balances etc. Even private companies that serve the public should be considered Public companies founded and managed by individuals or group of people but subjected to Just national laws/principles like those listed above 👆

Some of us are against control and of course if it is a CBDC you expect the state to be in control, but in a transparent way as you say. Like blockchain,,, it should have a block explorer,,, and a naming of all the controllers (or nodes), so people know who is validating and who is managing channels.

But not all CBDCs will choose blockchain and even those who did like Venezuela did not make an accountable system and printed tokens anyway.

I think euro CBDC will be the closest to adhere, but then, so many people have interest and benefits to lose with accountability

[livingfree]

You are right with the section, this discussion belongs here.

Haven't seen a thread related to a CBDC. I don't expect them to come in the forum and create an Ann thread for questions and stuffs. I think they'll use private blockchain and it's not that public at all.

Take this article and try to look for some answers for your other questions.

https://www.bitira.com/central-bank-digital-currency-cbdc/

Good read, Thanks!

It looks to me like they are all fiddling in their cellars on different implementations.
As someone else mentioned above, PoW and PoS really don't make any sense at all for CBDCs, which is what I also think, and which I find really interesting.

You're welcome.

Well, to see a CBDC that will have a consensus algo of PoW will make everyone interested on it. That's like mining money easily through computers and everyone would love to invest on it even if it's going to cost a lot of money but if the return and produced money is for real and can be spent in real world.

And for it as PoS, that's the same as PoW for the investors perspective but sadly, it's not with those algos.

[l8orre]

You're welcome.

Well, to see a CBDC that will have a consensus algo of PoW will make everyone interested on it. That's like mining money easily through computers and everyone would love to invest on it even if it's going to cost a lot of money but if the return and produced money is for real and can be spent in real world.

And for it as PoS, that's the same as PoW for the investors perspective but sadly, it's not with those algos.

I think the concept of 'consensus' is the central issue here. Consensus among whom?
Participants of the network ofc, but if it is permissioned the whole game theory aspect goes down the drain.

So there will be a bunch of permissioned members of the club (state run financial authorities  ) that 'run' the network and pretend to implement the Bitcoin kind of game theory, but in reality it will be just that: Lame pretense because all they really want is a cryptographically secured distributed ledger.

As Andreas keeps saying: They might as well just run a database for that.

And if they run it on a closed circle of permissioned participants, we all know how many attack surfaces that exposes to the outside world 

[MCobian]

Knowing the blockchain technology used by cryptocurrencies is decentralized, This makes the Central Bank build a digital currency
in a different method, more centralized way. So they will build a digital currency that is controllable and not transparent, because
Central Banks always want to have the power to control their citizens. Therefore, until now there has been no detailed explanation
regarding the implementation to be carried out by the Central Bank.

[Argoo]

Its just the digital fiat running on their own blockchain and not much change in terms of the usage because its same like how we are using our online banking system but with closed/centralized blockchain which is going to be under the control of the government and central bank authority of respective country.

Yes you are right.  The digitized currencies of the central banks of the states will actually represent the same currencies of the states, only in digitized form.  The digitized currencies will apparently differ from their pre-existing non-cash payments only in that this digitized currency will be on the blockchain.  I think the emergence of the Chinese digital yuan will bring clarity.  Using the example of its functioning, we will already be guided by how the digitized currencies of the central banks of states will work in practice.

[antsam]

They certainly will not want to just let go without their control, that control must exist because they also definitely avoid the inflation that can occur without full control. Since their function as central bank they will definitely have it in their hands

It's governed by a central bank its surely a centralized currency but it will be good if the CBDCs are going to be using blockchain because it's traceable and documented by its ledger itself. Having a blockchain will help the country's transparency in its financial system.

The question however is that would they really make the ledge public. Its likely not.

Especially from a country like China where public freedom is still hard to obtain, that country is trying to exercise control over everything, including crypto for its citizens.

No one is against control, but public asset/system/network has to run publicly and not privately. A public system has to be decentralized, transparent, open, with accountability, be immutable (my post on immutablity below👇), adhere to just national laws/principles, respect people's privacy, etc..
I believe it should illegal/immoral for public system, network or assets to be run privately  like many are run today. This is can encourage corruption, lawlessness, no checks and balances etc. Even private companies that serve the public should be considered Public companies founded and managed by individuals or group of people but subjected to Just national laws/principles like those listed above 👆


*Immutablity does not prevent you from changing something of "historic value"
https://bitcointalk.org/index.php?topic=5270395.msg55037915#msg55037915

And...
* Understanding Decentralization.
https://bitcointalk.org/index.php?topic=5249300.msg54453340#msg54453340

But what is feared is the control of a country like China and several countries that have full control of their citizens, isn't it said that China's central bank is one of them that will soon adopt it.

[magneto]

With increasing mentions of CBDCs, maybe it is time to start looking at the actual technology and methods that CBs are looking at to implement them?

Is there already such a thread here on bitcointalk?

Are they looking to use some blockchain construct?

How will their networks be assembled?

What will the 'governance' and 'consensus' mechanisms work? 

Aside from a lot of mentions of CBDCs in the finance media, none ever mention the actual implementation details 

I would say that the 'Altcoin Discussion' section would be an appropriate place for that - please drop info/ opinions 

It's inevitable, but I don't think that they will adopt a structure that is even remotely similar to decentralised cryptocurrencies.

Ultimately the government and the central bank's aim is to retain a greater degree of control over money supply, and to potentially implement more creative ways of managing the cash market through principles of MMT.

Perhaps blockchain technology will be used, but there will likely be a much greater emphasis on the centralised power of government to alter/change transactions. So not necessarily immutable I'd say.

[litepool.ru]

But what is feared is the control of a country like China and several countries that have full control of their citizens, isn't it said that China's central bank is one of them that will soon adopt it.

CBDCs are a really important issue, i see this issue requiring crypto approval from some of the world's leading economies such as the US and China. These countries will have a voice for this market, i think if big countries accept this market, CBDCs will really be a new trend in the industry.

[tbct_mt2]

Central Bank Digital Currencies are other shady and trash centralized currencies from governments. If you want to discover facts about Central Bank Digital Currencies, the topic of Ratimov can help you to start. [GUIDE] All About Central Bank Digital Currency (CBDC).

[l8orre]

Central Bank Digital Currencies are other shady and trash centralized currencies from governments. If you want to discover facts about Central Bank Digital Currencies, the topic of Ratimov can help you to start. [GUIDE] All About Central Bank Digital Currency (CBDC).

wow! that is really in-depth survey! I think it is important to stay up to date with the details of how this is progressing!

[Febo]

With increasing mentions of CBDCs, maybe it is time to start looking at the actual technology and methods that CBs are looking at to implement them?

CBDCs of western world will have opaque ledger like Monero. CBDCs in China or Japan or Korea could have transparent edger like in Bitcoin. It will take years to develop and implement them.  By that time they might realize that no one will want centralised coins.

[Ozero]

With increasing mentions of CBDCs, maybe it is time to start looking at the actual technology and methods that CBs are looking at to implement them?

CBDCs of western world will have opaque ledger like Monero. CBDCs in China or Japan or Korea could have transparent edger like in Bitcoin. It will take years to develop and implement them.  By that time they might realize that no one will want centralised coins.

The digitized stablecoins of the central banks of the states will be in demand and popularity among the population.  The population of any country will trust their government and the state.  These will be the same state currencies, only in digital form.  Therefore, they cannot be compared to cryptocurrency.  Digitized currencies should have better functional characteristics than non-cash forms of payment, since they will combine both the advantages of conventional currencies and cryptocurrencies.  However, when they appear, then we will discuss them in more detail.

[icalical]

I don't think it's going to be Blockchain or anything similar to cryptocurrency/stablecoin. I think they will build it outside that so that they can still control the currency in the internet. CBDC aim is to just replace coins or banknotes or at least make an option to use money digitally.

If they actually make cryptocurrency, it will still be on blockchain kinds of platform, the difference is that it won't be decentralized. It will be very centralized where Central Banks control most (or even all) of the nodes, and most of the coin. Take Ripple for example before their separation with XRP, and even now they own approximately 90% of the total supply of XRP. I think more or less, that's how CB works when or if they actually issue a crypto.

[l8orre]

It seems to me that the whole game theoretic concept underlying blockchains is completely not applicable to permissioned and centralized concepts,
and I think that this will expose a lot of attack surfaces.

Consequently, we can expect some spectaclular failures if CBDCs are not well constructed.


Maybe that is why there is a lot of discrete research activity, but not much detail being published.

The other thread someone linked above has a good list, but they all seem very inconclusive...

Hyperledger and R3 Corda seem to be popular in CB research deps by the way, so looking at these could be interesting.

[Ucy]

No one is against control, but public asset/system/network has to run publicly and not privately. A public system has to be decentralized, transparent, open, with accountability, be immutable (my post on immutablity below👇), adhere to just national laws/principles, respect people's privacy, etc..
I believe it should illegal/immoral for public system, network or assets to be run privately  like many are run today. This is can encourage corruption, lawlessness, no checks and balances etc. Even private companies that serve the public should be considered Public companies founded and managed by individuals or group of people but subjected to Just national laws/principles like those listed above 👆

Some of us are against control and of course if it is a CBDC you expect the state to be in control, but in a transparent way as you say. Like blockchain,,, it should have a block explorer,,, and a naming of all the controllers (or nodes), so people know who is validating and who is managing channels.

But not all CBDCs will choose blockchain and even those who did like Venezuela did not make an accountable system and printed tokens anyway.

I think euro CBDC will be the closest to adhere, but then, so many people have interest and benefits to lose with accountability

Well, I believe one of the best way to manage public funds/assets is by managing them on system that is transparent, decentralized, immutable, safe, etc. Centralization only encourages lack of true transparency, lawlessness, secrecy, unauthorized changing/deletion/modification of public data, censorship, etc 
Most of us can't even see what is going on in our Central Banks which are supposed to be public (like Bitcoin network), nor do we have any say/power to affect them yet we are not that bothered?  I choose decentralization, transparency, immutablity and other good principles of Bitcoin over the closed/private Central Banks.