Working on the order of the United States President, the Office of Science and Technology Policy has presented a report that analyzes the various designs for the proposed Central Bank Digital Currency to be adopted by the country. The analysis was parsed through pre-stated categories that would be used to determine which of the 18 designs would serve the purpose of the American people.
The President’s Go Ahead
Up to 18 designs for the US CBDC are under scrutiny. Their technical analysis so a choice can be made was carried out based on six wide classifications which are governance, transactions, adjustment, data, security, and participants.
The Office of Science and Technology Policy said it foresees some complexities in the technology, as well as limitations, in the process of building a system needing no permissions yet governed by the central bank. It said that it might be possible that a technology that underpins such an approach that requires no permission will be improved as time goes by. That would potentially make it better suited for use within a CBDC framework, the office said.
But the analysis started from the point of assuming that a central authority exists and that there is a CBDC framework. The Office of Science and Technology’s report is to help the final policymakers make a decision on which CBDC framework will work best. It pointed out the implications that would attend to the inclusion of third parties within two designs that are in the participant category.
The governance category, however, considered different factors that are connected with permissions, identity, granting access, and remediation.
Security and Other Considerations
Some other significant issues the Office would like policymakers to look into include security hardware and cryptography, and the privacy of transactions. Other considerations include signatures, the programmability of transactions, fungibility and data model, transaction balance and adjustment, as well as holding limits.
The technical measurement of a CBDC framework for the US spotlights the inclination of the report in favor of a hardware, off-ledger protection system. After a CBDC has been approved and launched, it is said that the report will then list the different trade-offs made by policymakers while they finalized their choice.
The Office of Science and Technology Policy report mentioned that cryptocurrencies use about 50 billion kWh of electricity per annum in the United States. That accounts for about 38% of the total power usage in the world.
It stated further that MasterCard, Visa, and AmEx together use less than a percentage of electricity used by Bitcoin and Ethereum. This is in spite of the fact that those cards process far more transactions than the blockchain tokens.