Central Bank Project Proves Privacy is Possible with CBDC Payments

• Project Tourbillon: A Testament to Privacy in Digital National Currencies
• Key Findings of the Project
• Rising Concerns Around Privacy
• Exploring Privacy, Security, and Scalability
• Future Directions

Project Tourbillon: A Testament to Privacy in Digital National Currencies

A collaborative initiative by central banks has demonstrated the feasibility of preserving privacy in transactions involving national digital currencies. The endeavor, known as Project Tourbillon, was launched by the Bank for International Settlements' (BIS) Innovation Hub based in Switzerland. It investigates the possibility to maintain payer anonymity with central bank digital currencies (CBDC).

Key Findings of the Project

The final report of the project made public on Wednesday, reveals that the central banks examined payment methods which do not require users to share personal data with any party, including the seller. However, the seller's identity would be revealed to their bank at the time of transaction to aid in preventing tax evasion or illicit payments.

Rising Concerns Around Privacy

With global jurisdictions contemplating the issuance of digital variants of their sovereign currencies, privacy has surfaced as a primary public apprehension. "The most challenging user requirement to fulfill is privacy. The main hurdle lies in delivering privacy protection technologically, instead of merely assuring it, while simultaneously making sure that this high level of protection is not exploited," as mentioned by Thomas Moser, an alternate board member at the Swiss National Bank.

Exploring Privacy, Security, and Scalability

Project Tourbillon is a pioneering step in the exploration of privacy, security, and scalability for CBDC design, as stated in the report. The project successfully developed two scalable prototypes capable of managing an increasing volume of transactions.

Future Directions

The report also indicates that additional research is required to explore sustainable business models, offline payments, and other aspects.

Edited by Jonathan Stoker