Theoretical research into a central bank digital currency (CBDC) in the US has found that the distributed ledger architecture has “disadvantages”..
The Federal Reserve Bank of Boston and the Massachusetts Institute of Technology’s Digital Currency Initiative released the results of their initial research on Feb. 3 via a CBDC.
The research project, called The Hamilton Project tested a “hypothetical general purpose CBDC” using two possible models.
The first transactions were processed via the distributed ledger technology (DLT) of the “Order Server”.which organizes validated transactions into blocks to create an ordered transaction history.
Researchers were able to use this architecture to complete more than 99% of transactions in less than two seconds. and most transactions in less than 0.7 seconds.
But still, The ordering server caused a number of problems as it ran under the control of a single actor, leading the researchers to conclude that “a distributed ledger architecture has downsides”..TO
“For example, it creates performance bottlenecks and requires the central transaction processor to manage transaction history, which one of our designs does not, resulting in significantly higher transaction performance scalability properties.”
they added Despite leveraging lessons learned from blockchain technology, there was no need for a “distributed ledger operated under the jurisdiction of different actors.”.
The second architecture processes transactions in parallel on multiple computers.rather than relying on a single ordering server to avoid double spending. Researchers wrote that “while this allows for superior scalability,” it “does not realize an orderly history for all transactions.”.
Proven throughput of 1.7 million transactions per second, with 99% of transactions consistently completing in less than a secondmost of which were completed in less than half a second.
The Hamilton Project was first announced in 2020 to study the use of existing and new technologies to build and test a hypothetical digital currency platform. The code is the first contribution to OpenCBDC, an MIT-managed project that will serve as a platform for further CBDC research..
said Jim Cunha, executive vice president and acting chief operating officer of the Boston Fed The project shows that it is “crucial” for changemakers to understand not only how emerging technologies could support a potential CBDC, but also what challenges remain.
“This collaboration between MIT and our technologists has created a scalable CBDC research model that allows us to learn more about these technologies and the options to consider when developing a CBDC.”
MIT Digital Currency Initiative director Neha Narula said that “many challenges remain to be resolved in determination whether or how to introduce a central bank payment system for the United States.”