With the advancement of technologies such as Blockchain, efforts for the development of token-based payment systems are now being taken seriously by governments, enterprises, and even individuals, namely creating global digital currencies and central bank digital currencies [1].
In a previous article [2], I elaborate on some of the dangers of a global cryptocurrency managed by private enterprises, namely Libra; now, Libra has rebranded to “Diem,” a name given after an independent group organized by Facebook to manage efforts on the digitization of currencies.
However, Diem is not the only player in the market. Central bank digital currencies (CBDC) provide its users with a tokenized version of fiat currency, for example, a digital euro or a digital dollar.
Comparatively to traditional cryptocurrencies, a CBDC is centralized, and thus it is regulated by the issuing organization or country.
In a paper dated 14th December 2020, Visa Research introduced “Towards a Two-Tier Hierarchical Infrastructure: An Online Payment System for Central Bank Digital Currencies” [3].
In this technical paper, researchers propose an offline payment system for central bank digital currencies.
This system’s underlying idea is to allow peer-to-peer payments, without a third-party, even in an environment without an internet connection.
