The dramatic scaling of Bitcoin and the steadily growing interest in its trajectory has sufficient twists to fill a novel. Topping the beauty is that it is beyond the scope of regulations by the governments and is fabulously anonymous. Its price fluctuations come entirely from the market demand and supply.
Failure to curb the leaps and bounds by which the digital currencies are gaining traction in the market is one reason for the central banks to come up with their own version of a digitized currency — the CBDC. Other reasons should be doing away with the expense incurred from circulations of banknotes and coins in the market and combat counterfeiting.
Now that we have garnered some idea as to what good CBDC might be up to, we may attempt a peek at its technological requirements. Imagining the gravity of a national currency denominate of electronic nature, burdened with the liability of the central bank of a country, here’s what the technical aspects should look like.
- Resilience- Entails high operational availability, round the clock and round the year.
- Security- Shielded against cyber breaches.
- Scalability- The capacity to handle tens of thousands of transactions per second.
- Transaction processing- Transaction to be near-instantaneous, real-time, and with the finality of settlement.
- Confidentiality- Protection of privacy not amounting to anonymity.
- Interoperability- Interoperability with existing systems and other CBDCs.
- Innovation- Enable the overlay of innovative features and services.
- Future-Proofing- Capability to seamlessly upgrade and enhance without impacting service.
The technical wing of HashCash is crypto-hardened and supper-savvy when it comes to virtual currency riding on the Blockchain technology. With knowledge, as much as above, we’re now good to give it a formal definition.
“A central bank digital currency (CBDC) is an electronic record or digital token to represent the virtual form of a fiat currency of a particular nation (or region). A CBDC is centralized; it is issued and regulated by the official monetary governing body of the country.”
Now, Delving a Bit Deeper Into Its Working:
Each CBDC unit is set to act as a secure, digital instrument and an equivalent of paper currency. In every likeness to a banknote or a coin, the CBDC shall bear a unique serial number that distinguishes it from others of the same denomination and also serve as a protection against counterfeit money.
Not a great deal of examples may be cited at this point as CBDC is still being run as a pilot project in most nations. Although China claims to have already engendered the digital Yuan, it is unknown whether or not it is fully in circulation - countrywide. The Central Bank of Bahamas had run the pilot project back in 2019 and had their sand dollar launched in 2020, thus, effectively making this archipelago the first nation to launch their CBDC.
Evidently, this is a tricky situation for global leaders looking forward to introducing their own CBDCs. Each nation has its own set of challenges with regard to financial instruments. Therefore each must take their own time to draw up their drafts on CBDC. Words of Federal Reserve Chair Jerome Powell: “We don’t need to be the first. We need to do it right,” effectively summarises this.
Use Cases of CBDC
HashCash's team of experts devise two distinct models delineating the behavior of CBDCs in each case: the Retail Model and the Wholesale Model.
In the Retail model, CBDC would be distributed by the existing banking system and deposited in electronic wallets by the non-bank public and other end-users. This would present a payment option to carry out consumer-to-consumer, consumer-to-business, and business-to-business payments. CBDC would offer instant settlement and would reduce the risk that is inherent in the batch clearing of retail payments.
In the Wholesale model, CBDC would serve to boost the financial innovation capability by founding alternative platforms - those enabling a wider spectrum of payment capabilities and increased competition across platforms. All of this should translate to a diversified of national payments and bolster resilience and security in large-value payments.
Consulting and Advisory Services by HashCash
With regards to nations in a rush to adopt the CBDC, it is safe to state that the move is necessity-driven. As Beijing puts it, this is aimed at cutting the expense of circulating physical money and combat counterfeiting.
HashCash’s team boasts of seasoned skill with virtual currencies and exchanges, given the number of projects successfully running on their merits. Banking on this expertise coupled with their even deeper roots in financial space, HashCash finds itself at the helm with the volume of available resources to provide valuable guidance and insights on the subject.
The concept and innovation put into CBDC reserves the potential to curb a world of problems. And the implementation of the system as a whole is not devoid of challenges either. The CBDC is aimed at solving the chief problem of operating the online wallet. The “online” aspect of the concept involves network connectivity. To work out this problem, the CBDC has to operate equally effectively in an “offline” mode, i.e, without the internet or it defeats the purpose.
HashCash specialized in research and development turning the same into the implementation of Central Bank digital currency. Having worked with Global Central banks to build solutions since 2015, the company continues to provide leads on design policy and motivation issues, thus, driving the adoption of CBDC. HashCash resorts to collaborative and consulting services to bring the fruition of CBDC.