According to tests, the CBDC does not need a blockchain to work2 min read
After China’s digital yuan debuted on the first day of the 2022 Winter Olympics in Beijing, other countries took a step to enter the CBDC development arena. Surprisingly, it is the USA.
No blockchain is required for CBDC to work
The Boston Federal Reserve and the Massachusetts Institute of Technology (MIT) have published a summary of the first phase of blockchain-based digital currency testing as part of the Hamilton project.
Both organizations tested two technical architectures for transaction processing and shared basic statistics. The first model completed 99% of the transactions in less than two seconds, however, due to technical problems, the maximum speed was about 170,000 transactions per second.
The second model reached 1.7 million transactions per second, 99% of which were completed in less than one second. The model had the potential to scale, but the problem was that the transactions did not have to go in the specified order.
Despite the benefits of blockchain technology, we have found that a distributed ledger operating under different jurisdictions is not required to achieve our goals.
In addition, the FRB found that this technology also has disadvantages, such as “bottlenecks”.
The MIT report showed that Project Hamilton did not develop digital currency for everyday use only. Rather, the experiment was conducted to develop a technical understanding of digital currencies and to study “viable concepts.”
As a result, the Federal Reserve in Boston has questioned the indispensability of distributed ledger technology.
This approach gives federal authorities more time to stress test digital currency and address privacy issues.