The Bank of England (BoE) has made significant progress in its Central Bank Digital Currency (CBDC) initiative, with the head of fintech and CBDC program, Tom Mutton, discussing the digital pound’s privacy aspects and potential alternatives to blockchain as the underpinning technology. During a recent meeting of technologists hosted by BoE, the digital pound design raised concerns regarding which ledger should be used for the CBDC, leading the bank to consider multiple ledger technologies, including blockchain.
The digital pound, nicknamed ‘Britcoin,’ was first proposed in April 2021 when the UK Treasury and the Bank established a joint task force to research a UK CBDC. In February 2023, the Bank issued a consultancy paper outlining the digital pound’s design. The BoE and the Treasury are now seeking feedback from stakeholders and tech experts on the proposed design until June 30.
Aside from the ledger technology discussion, Mutton emphasized the privacy aspect of the CBDC, stating that the digital pound will prioritize user privacy and not collect personal data. He explained that the bank’s focus would be on providing the infrastructure, while private players drive innovation. Mutton assured that BoE or the government would not access user data, and even wallet providers with limited access to that information would require user consent for data storage.
The progression of the digital pound project highlights the potential implications of CBDCs and their innovative design requirements. As the UK begins to trail multiple ledger technologies for their CBDC, it sparks questions about the efficiency and applicability of distributed-ledger business models and distributed ledger technologies with conventional ledgers. Emphasizing privacy in this new digital currency is crucial, as it may encourage both enthusiasts and skeptics of crypto and blockchain technology to embrace and adopt the new CBDC.
With private players driving innovation in the digital pound project, it underlines the importance of collaboration between public and private sectors in the evolving financial landscape. The BoE’s initiative also showcases the broader shift towards digital currencies and CBDCs on a global scale. As central banks worldwide continue to explore and potentially implement their CBDCs, the underlying technology choices and privacy aspects will likely dominate discussions and evaluations of these digital currencies.
Source: Cointelegraph
