There are two things at odds in developing a secure, immutable ledger of transactions for a Central Bank Digital Currency (CBDC). You want the immutability and security of decentralized cryptocurrencies, but you also want the centralized control of a permissioned distributed ledger; which creates some contention in the design.
You will continue to see most CBDC designs and a lot of distributed ledger platforms stating that they are NOT blockchain. I would point you back to my CBDC nonsense article that kicked off this series for a refresher. Essentially, when a CBDC like China’s digital Yuan states that this is not blockchain – they are trying to tell you the same thing R3 was trying to say to you when they noted that Corda was not blockchain. ‘Not Blockchain’ is telling you that it is not decentralized, but it is still a distributed ledger design and it still uses the hashing techniques of blockchain to make the ledger an immutable chain of events. It does not, however, behave or operate like Bitcoin. For most solutions in the CBDC space, this is good enough for the ledger but maybe not for operations.
A central bank offering a digital currency is potentially taking on a single ledger’s operation for an entire economy. If you want to go with ‘a single ledger to rule the world of money’ in your country, you have a lot to consider in scaling that solution to all participants of your economy. It won’t matter if you are trying to centralize the ownership of a tokenized currency or an account-based model. While an account-based offering is potentially 87 times more complicated, you still need to scale and process transactions efficiently and effectively with immutability that participants can trust. With the centralized model, the keys to the kingdom are the administrative IDs that control the nodes. The number of nodes, the location of the nodes and the ability to keep all the nodes in sync to effectively serve millions of people 24x7x365 will be difficult for just about any central bank. None of the world’s current central banks have taken on a technology delivery of that scale – ever. A centralized model means that a compromise of any credentials in the infrastructure not only disrupts the operation of the currency but can also erode trust in the currency itself. Centralized infrastructures would be under almost constant attack – no central bank is equipped to deal with that level of scrutiny or liability.
