Bitcoin Architecture Can be Used for Creation of CBDC
3 min read

Bitcoin’s Architecture Can Be Used For Creation of CBDC: Deloitte

By News Desk

Big 4 accounting firm Deloitte says that Bitcoin could contain part of the blueprints of a “state-sponsored cryptocurrency” as the race for central bank digital currencies (CBDCs) develops.

In a new report titled “State-Sponsored Cryptocurrency: Adapting the best of Bitcoin’s Innovation to the Payments Ecosystem,” Deloitte analysts hash out the main differences between Bitcoin – what some would argue to be an already perfect global decentralized payment system – to a CBDC system that governments and central banks would prefer.

“The foundation of a state-sponsored cryptocurrency would be much like Bitcoin – individuals or companies would utilize computer-generated public ‘addresses’ to send and receive payments,” they said.

“Payers could use an electronic wallet on a smartphone or computer to send money to the public address of the recipients. Unlike Bitcoin’s current system, however, banks and other financial institutions, previously approved by the Central Bank, would be the custodians of a shared, distributed computer-based ledger (called a blockchain in Bitcoin parlance).”

Image via Shutterstock

Deloitte says that by combining the best attributes of Bitcoin’s technology with the features of an established fiat currency under the sponsorship of a central bank, “the result may very well just be a new method of handling payments that would revolutionize the current system.”

“Under state-sponsored cryptocurrency, supporting cross-border payments would be straightforward and not require any additional steps than previously described. The payer and payee requirements would be the same; that is, foreign entities (banks, businesses or private citizens) would obtain a private key on the cryptocurrency’s distributed ledger through the previously mentioned regulated channels.

Once they have the private key, they could seamlessly transfer money in the source currency, applying the same conversion rates as fiat currencies do today.”

According to Deloitte, one of the major differences between Bitcoin and a state-sponsored crypto is that the latter would have no cap on supply contained within its protocol. Additions to and subtractions from the ledger could only be done by a central bank. In addition, the ledger wouldn’t be public, instead only viewable by regulated financial institutions and banks. The firm also argues that a CBDC wouldn’t be permissionless, but would require involvement with a regulated financial institution in order to obtain a private key.

Deloitte’s theory comes as many major governments around the world mull CBDCs. According to the Atlantic Council’s CBDC tracker, 9 countries have launched one, 15 countries are in the middle of a pilot program, and 16 more are in the process of developing a CBDC.

Newsletter Inline

Disclaimer: These are the writer’s opinions and should not be considered investment advice. Readers should do their own research.

Latest Posts

crypto gifts
Top 10 Best Crypto Gifts in 2022
crypto gifts

Top 10 Best Crypto Gifts in 2022

October 3, 2022 24 min read
How interest rates impact everything macro look at interest rates
How Interest Rates Impact Everything
How interest rates impact everything macro look at interest rates

How Interest Rates Impact Everything

September 30, 2022 25 min read
How to stake MATIC with Ledger

How to stake MATIC with Ledger

September 29, 2022 5 min read
PrimeXBT vs Bybit 2022: Which Exchange is Best for Crypto Trading?

PrimeXBT vs Bybit 2022: Which Exchange is Best for Crypto Trading?

September 27, 2022 26 min read
How to Buy Bitcoin on Binance

How to Buy Bitcoin on Binance

September 26, 2022 7 min read
How to buy Polkadot at FTX
How to Buy Polkadot (DOT) on FTX Exchange
How to buy Polkadot at FTX

How to Buy Polkadot (DOT) on FTX Exchange

September 23, 2022 9 min read
Crypto Safety 101: How to Protect your Crypto

Crypto Safety 101: How to Protect your Crypto

September 22, 2022 44 min read

Related Posts

How interest rates impact everything macro look at interest rates
How Interest Rates Impact Everything
How interest rates impact everything macro look at interest rates

How Interest Rates Impact Everything

September 30, 2022 25 min read
How to stake MATIC with Ledger

How to stake MATIC with Ledger

September 29, 2022 5 min read
Blockchain Security: How to Understand Blockchain Audits to Stay Safe in DeFi

Blockchain Security: How to Understand Blockchain Audits to Stay Safe in DeFi

September 21, 2022 26 min read
Using Modern Portfolio Theory to Build a Crypto Portfolio
Using Modern Portfolio Theory and How to Build a Crypto Portfolio
Using Modern Portfolio Theory to Build a Crypto Portfolio

Using Modern Portfolio Theory and How to Build a Crypto Portfolio

September 12, 2022 48 min read
Top 5 Crypto Scams to Avoid in 2022

Top 5 Crypto Scams to Avoid in 2022

September 7, 2022 30 min read
What is Etherscan and how to use it
Etherscan Review: Public Face of Ethereum
What is Etherscan and how to use it

Etherscan Review: Public Face of Ethereum

August 30, 2022 16 min read
Can you still make money mining Monero
Can You Still Make Money Mining Monero in 2022?
Can you still make money mining Monero

Can You Still Make Money Mining Monero in 2022?

August 27, 2022 16 min read