The Innovation Hub of the Bank for International Settlements (BIS) has released the concluding report for Project Tourbillon, a private central bank digital currency (CBDC) initiative. It features two eCash prototypes, providing anonymity and security.
The November 29 publication of the 46-page report examines privacy, security, and scalability concerning two prototypes constructed using the blueprints of David Chaum, a cryptography pioneer.
The names of the prototypes were eCash 1.0 and eCash 2.0. In contrast to the former’s provision of “unconditional payer anonymity,” the latter’s security features are “more resilient.”
According to the report’s authors, it is possible to implement a CBDC that protects against illicit transactions while ensuring the anonymity of payers. According to the report, Project Tourbillon accomplishes this by providing the consumer complete anonymity throughout the transaction with the merchant.
“A consumer paying a merchant with CBDCs is anonymous to all parties, including the merchant, banks and the central bank.”
In this arrangement, the payer is privy to the merchant’s identity; the merchant’s bank is merely informed of the information as a transaction condition. Although the central bank cannot access individual payment information, it can track the circulation of CBDCs in aggregate.
To use the CBDC, all users must complete a Know Your Customer procedure at a commercial bank. Similar to the present financial system, the onus continues to be on the merchant’s bank to ensure that transactions adhere to regulatory obligations, including but not limited to laws concerning anti-money laundering, countering the financing of terrorism, and tax evasion.
Using existing technologies such as QR codes, proof-of-stake protocols, and account relationships among consumers, merchants, banks, and central banks, the report concludes that Tourbillon’s payment process is simple to integrate into the current payment environment.
Assisting the Swiss National Bank in developing CBDCs globally and working with central banks in China, Hong Kong, Thailand, and the United Arab Emirates, among others, the BIS leads the way in adopting CBDCs. It also collaborates with the European Central Bank on a proof-of-concept transaction tracker.
