MIT’s Hypothetical Central Bank Digital Currency Is Now in Testing

A Central Bank Digital Currency, or CBDC in short, is a controversial topic when it comes to the new form of money. While there was a lot of talk around the issue, a real prototype or hypothetical version was not tried, which brings attention to today’s subject. MIT experts have recently developed a hypothetical open-source central bank digital currency named “OpenCBDC”, collaborating with the Federal Reserve Bank of Boston. The project is now on as open-source on GitHub and is explained in its research paper as well.

Central Bank Digital Currency as the new form of money

Most people were either fascinated by or did not understand Bitcoin’s technology back in the day. However, with the recent boom and bust cycle of the market, the attention was there and people started to question what would happen if central banks created a digital currency, a “digital dollar” if one likes to call it so. With the main aims of “security, flexibility, and efficiency” without intermediaries, decentralized currencies were seen as the money of the future.

However, after a lot of market movement and instability, combined with an awful lot of scams (Read: a previous article on NFT Hacks) and unknown culprits behind those digital currencies were seen as dangerous things.

CBDCs are a whole different concept than decentralized digital currencies. With a “trusted operator” such as an official banking system, a fully tracked-flexible and fast system without intermediaries to pass money through; it has its slight nuance in security different from the normal decentralized digital currencies. Because of the promise, CBDCs have their requirements like high processing power (If the currency were to go mainstream you would not want any interruptions or stutters on the network), trust, and mostly, stability.

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With the new hypothetical central bank digital currency by MIT experts, the team plans to test the advantages and disadvantages of a central bank digital currency while developing the system to be actually usable in real life. It is even deemed as a “scalable research model”.

If you want, you can check technical specifications and “Phase 2” plans from the original research website. The project looks very promising. However, it must be said that even the research paper is saying that there is “no validity in the future adoption of the technology” as the central bank digital currency. We might have to wait to see what the new-age payment or banking is going to be like since there is no certainty about it. It might even stay the same.

However, as we strive for innovation and development in everything but the item -money- that most lives revolve around, it might be a good time for new innovations, after resolving the ongoing issues with digital currencies of course.

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