The Federal reserve Bank of Boston will study 30 blockchains for an initiative to develop a digital dollar. The research is being conducted in conjunction with the MIT Digital Currency Initiative project.
Earlier this month, the Federal reserve Bank of Boston said it was actively testing the digital dollar , a tokenized version of the US dollar, in conjunction with the Digital Currency Initiative (DCI) project of the Massachusetts Institute of technology (MIT).
According to Jim Cunha, senior Vice President of the Boston fed, the collaboration builds on previous research and aims to explore how the digital dollar can complement the existing dollar. The results of the study will be published and could potentially be factored into the real digital dollar when and if it is released.
“We are trying to create a platform to understand whether a distributed Ledger can meet the needs of the us Central Bank’s digital currency,” he said.
According to him, the cooperation is “at the stage of formation”, which means that right now the two institutions are determining what requirements are imposed on the project and which platforms should be used. In the course of their work, the researchers hope to develop requirements for scalability, bandwidth, privacy, fault tolerance, and resistance to cyber attacks.
“I think we will first look at 30 to 40 different open source solutions or very high-level private solutions, and then look more deeply at some of them,” Cunha said.
DCI Director and MIT research associate neha Narula noted that the Massachusetts Institute of technology is a neutral research institution. The project’s researchers will study various infrastructures, and Narula hopes to provide specific data and options for deploying the digital dollar.
“We are happy with this collaboration because DCI’s goal is to answer the fundamental questions needed to determine under what circumstances a state-owned cryptocurrency is a good idea and how we could deploy it if the fed decides to do so,” she said. “Working closely with one of the largest Central banks in the world is incredibly useful in terms of getting real-time information on how to formulate and answer these questions.”
Bob Bench, Deputy Vice President of the Boston fed, said that the US may have a different view on privacy or other issues related to the state cryptocurrency than the rest of the countries. Therefore, the study should examine possible measures to ensure confidentiality. According to him, even the main issues, such as which programming language should be used, have not yet been resolved.
Cunha said the goal of the project is to publish a joint study within the next two years so that anyone studying the concept of a state-owned cryptocurrency can learn from this collaborative work.
Narula noted that a retail-oriented digital dollar system will require the fastest response and high throughput. It must process a large number of transactions per second, while remaining secure. According to Narula, the fed wants to use existing cryptographic systems and distributed registries “that have been tested in the real world.”
According to the latest report
The Bank for international settlements (BIS), in 2020, interest in the Central Bank’s cryptocurrencies has become higher than in bitcoin and the Libra project. According to BIS, in the Netherlands, China and Sweden, Central banks are giving priority to research work in the development of state-owned cryptocurrency during the pandemic.