The Boston Federal Reserve is evaluating between 30 and 40 public and private blockchains in order to test the creation of a possible digital dollar.
The studies and evaluations being carried out by the Federal Reserve Bank of Boston currently focus on knowing what the blockchain most optimal to implement a possible digital dollar in the future. In mid-August, the FED confirmed that it has been carrying out studies on blockchain technology together with the Massachusetts Institute of Technology (MIT) to know the potential and benefits of this technology. As reported by the FED, the studies will help the entity evaluate all the options that currently exist in the market to build and implement a digital infrastructure that allows the creation of a CBDC that complements the current dollar.
Jim Cunha, senior vice president of the Boston FED, stated that the entity is looking for between 30 and 40 blockchains to evaluate all the existing possibilities and have a complete vision of the benefits of implementing a digital currency. In addition, through these studies the Boston FED also seeks to ensure that the characteristics of a CBDC digital currency, for the dollar, will be able to satisfy all the needs present within an entity like this. According to Cunha's claims, different open or private source blockchains will be evaluated at a high level.
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Training phase for the development of a digital dollar
Based on the results that the FED manages to obtain, with the tests that will be carried out on the different blockchains, Cunha assures that the entity will consider or not the creation of a real digital dollar, although he confirmed that this is still several years away. Likewise, the senior vice president of the Boston FED stated that as these tests and investigations progress and are developed, the entity will answer important questions about the CBDC and its digital infrastructure, such as scalability, privacy, performance, the flexibility and security of using a digital currency.
“What we are doing now is much more comprehensive, we are building a platform to see if DLT can meet the digital currency needs of a US-based central bank… Can it really work?”
Although so far the Boston FED has not confirmed that they are developing a real digital dollar, the tests, analyzes and studies that the entity is carrying out do ensure interest in the development of this currency. And even more so remembering that the Asian giant, China, is making strides towards implementing its own CBDC with a global order blockchain infrastructure.
On the other hand, the havoc caused by the current economic and health crisis is leading regulators and governments around the world to once again consider the possibility of establishing their own digital currency. For example, the distribution of stimulus checks to the American population was carried out with difficulty among the unbanked population, while those who had checking accounts in the nation's banks received their deposits directly. This delay situation for those who do not have bank accounts would have been avoided if a digital currency was implemented.
Important objectives in the design of a CBDC for the digital dollar
Beyond the basic aspects, the FED seeks to understand the meaning and real implications of using a digital currency issued by the bank. For example, Cunha stated that it is not about creating a new consensus algorithm and putting it on the market, but rather using one that already exists and is tested in the real world, with real applications and that demonstrates high performance with efficient results. .
The FED wants to take full advantage of the potential features that are present in blockchain technology and distributed technology, to test whether the returns and scalability of a digital currency will allow thousands of transactions per second, smoothly and securely, to satisfy the growing needs in a country as demanding as the United States. Likewise, another of the Boston Federal Reserve's objectives is to ensure that the creation of a digital currency will be useful to the entire population, both banked and unbanked. Likewise, privacy and system security are also very important aspects to consider in the design of a digital currency.
Finally, the entity points out that there is no need to rush the launch of a digital dollar, despite the fact that China's announcement of the digital yuan and the Facebook currency, Pound, create an atmosphere of urgency. According to Cunha, the production of a digital currency for the dollar may take up to 2 or 3 years.
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