nChain CBDC playbook: Everything you need to know about central bank digital currencies

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How close are countries and governments to implementing a central bank digital currency (CBDC)? According to nChain’s CBDC Playbook, emerging economies could be 3-5 years away from getting a CBDC up and running.

CBDCs have been a popular topic of discussion for several years now; some countries have already launched their CBDCs, while others have announced they are researching and developing them. Norway’s central bank recently announced that it has been researching CBDCs and that the Bitcoin (BSV) blockchain is being considered as the infrastructure layer they will be building their CBDC on top of. 

But how does a country’s government know if a CBDC is right for them? The fact that others are researching, developing, and implementing CBDCs into their banking systems signals that it is a concept worth investigating, but what are the technological, operational, and logistical factors that need to be considered when building a CBDC?

To answer those questions and to bring governments up to speed on those matters, nChain has published a CBDC playbook that serves as an informational launchpad for any entity that is considering building or issuing a CBDC.

In our newly published #CBDC #Playbook, we explore in detail:
– the drivers and challenges of CBDCs
– the benefits they bring
– the strategic and technical considerations around their design and implementation.

Get exclusive access to the Playbook here:https://t.co/OQTIt9fmzn pic.twitter.com/n1Yu1kwzVo

— nChain (@nChainGlobal) August 31, 2022

Central bank digital currency

There is room for improvement in many areas of the banking system, primarily regarding payment settlement, system transparency, programmable money, and security. Naturally, a public blockchain introduces those elements to the systems that are built on top of it, which is why many governments around the world turn to blockchain to build their CBDCs.

nChain’s CBDC playbook explores the various advantages that a CBDC can introduce to the banking system or to consumers such as economic stability, policy implementation, efficient payments, increased security, and increased transparency. 

The playbook also looks at the challenges and risks that lay in the way of CBDC adoption such as the systematic risks that come with transitioning to new technology, the fear banks have of disintermediation, consumer privacy issues, and the risk of theft and cyber attacks.

Outside of the pros and cons of CBDC, the report dives into several critical areas of CBDC architecture that are often overlooked in place of the very general discussion about the benefits or drawbacks that a CBDC can bring to the banking system. A few of these infrastructure pillars are CBDC authentication methods, database and storage solutions, and other design choices that have an impact on how the CBDC ultimately functions.

It’s important to note that there are primarily two different implementations of a CBDC. In the first implementation, only banks hold and transfer the CBDC. In the second implementation, consumers have wallets and can save and transact in the CBDC. nChain’s report explores these implementations and the efficiencies they can introduce to each market segment.

To learn more about central bank digital currencies and some of the design decisions that need to be considered when creating and launching it, you are going to want to read nChains CBDC playbook.

Watch: The BSV Global Blockchain Convention presentation, CBDCs and BSV