A single public blockchain infrastructure is the only way a CBDC will work because of trust. It's the only way government will be able to convince the people it is trustworthy. Its not a technical challenge which is is already solved anyway. It is a trust opportunity which needs to be boldly attended to.
Government say they need their CBDC to be transparent. So that they can trace and follow crime on their new cash system. I don't have a problem with that so long as every citizen's privacy is maintained.
But this is not the total extent of what transparency needs to be, if, government wants to make a CBDC work.
For a CBDC to work fully, for both that nation and all its citizens, transparency needs to be in totality. What exactly do I mean by this?
Government, having been misled by fintech for more than 5 years now, and fintech having failed to deliver on certain promises in 2019 using crippled crypto protocols, no longer believe a CBDC can be done on chain. But do they know it all? For there is a blockchain (DLT) protocol that has always been able to deliver. And a conspiracy theorist would say fintech have deliberately hidden it from view. Not me, but its curious that fintech are clueless about this because its already working live at scale.
But its not about "my protocol is better than your protocol". It is about private blockchains which are what fintech has always proposed and have failed to deliver on for so long, which can never deliver the total transparency required to make a CBDC work for everyone. Because a private CBDC network means government cannot be held to account, only citizens, and by government! Its a one way deal which will not garner the trust required to make a CBDC adoptable by the people.
What is more a private chain means multiple books are now possible, hidden. Such that legalised money laundering can continue to proceed. I'm not saying the UK government would do that. I am saying this sort of injustice remains possible if done on a private chain. But it's far more than that - the people will not trust it so it will never be properly adopted. Or at least it will be a far cry from innovation crippled by that lack of trust.
Don't get me wrong, I am not anti government nor anti bank. I am just pointing it out with clarity. Because I want a CBDC to work. So what do I propose?
Take a deep breath please everyone, for this is going to be hard to bear - for a CBDC to work it must provide total transparency and to do that it must be run on a public blockchain in the clear for all.
There cannot be more than one blockchain infrastructure. But a CBDC could for example already run tokenised as a layer on top of the current Bitcoin network with total transparency, while retaining total privacy for its users too. Why have fintech not put this on the table yet I wonder?
Worried about a single public blockchain? Why! The Internet is the exact same thing, just the old guard.
A single public blockchain infrastructure is the only way a CBDC will work because of trust. It's the only way government will be able to convince the people it is trustworthy. Its not a technical challenge which is is already solved anyway. It is a trust opportunity which needs to be boldly attended to.
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