CBDC privacy features
The Bank of England (BoE) is investigating privacy risks in the operation of CBDCs for public use, it was revealed on the 5th. British company Nuggets, a Web3 (decentralized web) technology and payment services company, will provide Digital Pound’s privacy and identity management technology.
CBDC (Central Bank Digital Currency) refers to a digital currency issued by the central bank of each country/region. Its use is broadly divided into “wholesale” between financial institutions and “retail” for the general public.
Nuggets offers a solution to surveillance and privacy concerns for retail CBDCs. Through verified self-sovereign decentralized IDs (SSDIDs), we aim to enable highly reliable and compliant transactions.
Nuggets is currently participating in Project Rosalind, a research project on retail CBDC operations in collaboration with the Bank for International Settlements (BIS) and the European Central Bank (ECB), along with the Bank of England. Rosalind is committed to testing the technical feasibility of retail CBDC and demonstrating its effectiveness.
Nuggets recently received an independent commission from the BoE to begin research and design on privacy and security for Digital Pond. The goal is to design a private and secure system that prevents transaction tracking and prevents fraud and money laundering.
The BoE project will use a cryptographic technique called “zero-knowledge proofs” as part of protecting privacy. This will allow for actions such as freezing, terminating or deleting CBDC accounts without sharing personally identifiable information.
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What is a zero-knowledge proof?
A type of proof protocol that allows a prover to prove that a claim is “truth” without disclosing any information other than “their claim is true” to the verifier.
Bank of England and CBDC
In February 2023, the Bank of England (BOE) launched an open call for public input on its plans to digitize the pound. At that time, Finance Minister Jeremy Hunt showed a positive attitude toward the introduction of CBDC.
Cash will never go away completely, but the digital pound, issued and guaranteed by the Bank of England, will be embraced as a new trusted, accessible and easy-to-use payment method.
The Bank of England will proceed with the digital pound’s testing and design phase over the next two years, and will decide whether to proceed with the development of the digital pound based on the results. CBDC pilot testing is not expected to begin until at least 2025.
Nuggets was founded in 2016 by founder and CEO Alastair Johnson and co-founder Seema Kinda Johnson. In addition to providing wallet solutions for CBDC, the company is developing a wide range of services such as voting systems in distributed autonomous organizations (DAO) and wallet development compatible with ZK Rollup.
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