The MIT Digital Currency Initiative, or DCI, is helping the federal reserve bank of Boston build a digital currency with the goal of scaling for consumer use. The DCI’s director Neha Narula told Cointelegraph:


“We're
trying to build a high throughput, low latency transaction system that
could be used by consumers and could handle the security and resilience
required for a national currency.”

The multi-year
collaboration between the two organizations is still in very early
stages and not much information is being released to the public. Yet the
focus is not on building a newer version of interbank digital ledger,
but rather something that the consumers would be able to use. It is hard
to estimate the required transactional throughput of such technology,
but considering that the U.S. population is around 330 million and the
fact that the dollar is the most widely used currency in the world (some
nations have even officially adopted it), this number would have to be
rather high.

Narula said that the DCI’s task is to build a
technology that will be released under the MIT license. The project is
expected to span two to three years and the final say over whether it
ends up being used to issue a digital dollar lies with the legislators
and policymakers. Seemingly one of the cornerstone issues of the project
is deciding on the levels of privacy and anonymity that potential users
should be afforded:


“So in our second year, we are going
to be more deeply investigating what kinds of trade-offs we can make to
achieve privacy or anonymity while at the same time being compliant
with laws.”

The researchers have examined existing
technologies and have not identified any that would be suitable for
their task. The mandate that the DCI has from the Fed is to build a new
technology from scratch:


“We don't believe that any of
the existing platforms that we've seen have been designed specifically
for a CBDC use case. And we're not sure whether they can fulfill the
requirements of a CBDC use case. It might be that the existing platforms
can, but our mandate is to start from scratch and to design what we
think would be a CBDC-first design.”

At this point,
Nurala was not willing to share whether the backbone of this new
technology was going to be blockchain or not. She said, “we're going to
be creating a design that pulls from best practices in distributed and
cryptographic systems broadly.”

The DCI has examined Facebook’s
Libra and, although its technology is interesting, Narula does not
believe that central banks would be willing to use a technology that was
built by a private sector company and over which they do not have full
control.

According to Narula, though the DCI employs
cryptographers, it may seek outside help in the future. Narula said that
all research and code generated by the DCI throughout the project will
be made available to the public in future.

We do not know if this
is the only digital currency project led by the U.S. government that is
focused on building this technology, but if that is the case, the U.S. would seem to be lagging far behind China
in the digital currency race. It is therefore unlikely that the
government will be able to adapt anything that comes from this project
before 2024 or 2025 at earliest.

sourcelink :  https://cointelegraph.com/news/mit-is-helping-the-boston-fed-build-a-cbdc-that-can-be-scaled-for-consumer-use