Study finds that the blockchain can play a key role in CBDC development

The blockchain can play a pivotal role in developing central bank digital currency (CBDC) platforms across the globe. A press release unveiled this news on December 12, noting that Eesti Pank, the central bank of Estonia, and Guardtime, a renowned European deep tech company, conducted a joint research project and found blockchain technology has multiple perks.

According to the news release, the two entities used KSI Cash, a digital currency technology that runs on the KSI blockchain, to investigate the technological and operational limits of the blockchain and its use in developing CBDCs.

After testing this concept, Eesti Pank and Guardtime found that blockchain-based digital bill systems are linearly scalable and highly efficient. Reportedly, the KSI Cash system boasts an end-to-end payment time of 0.6 seconds and can process up to two million transactions per second.

Additionally, the platform has a smaller carbon footprint and lower energy use than the current instant payment networks. Specifically, Eesti Pank and Guardtime found that KSI Cash used 70 µWh (micro-Watt-hour) per transaction, which equates to 16 micrograms of CO2.

On the other hand, one Visa transaction uses 0.1 Wh (Watt-hour). Bitcoin (BTC/USD) consumes much more, with each transaction consuming 1 MWh (Megawatt hour). It is worth noting that 1 MWh is equivalent to one trillion µWh.

Touting the system, Eesti Pank and Guardtime said,

The project measured resource load during testing and an indirect assessment of the carbon footprint of the system showed emissions of 32 tonnes of CO 2 per year, assuming a 14kW power requirement.

Seamless integration with current security systems

The research also found that KSI Cash can integrate with existing e-ID schemes. This capability makes it easy to check to Know Your Customer (KYC) details, consequently making the onboarding process a breeze.

Eesti Pank and Guardtime believe it is possible to introduce privacy-preserving architectures into such a system and make them compatible with analytics needed for anti-money laundering monitoring.

The research partners added that,

Digital bills provide the privacy and programmability benefits of tokens but can also be held in account-like wallets, while the custodial layer used in the test enabled compatibility with conventional payment infrastructures.

They further noted that KSI Cash’s security model verifies system operations cryptographically. All this without compromising security. On top of this, the system proved resilient to insider and outsider attacks, as well as Quantum attacks.

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