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A Closer Look at the BIS Innovation Hub’s Private CBDC

Walter Swift

ByWalter Swift

Nov 29, 2023

Against all odds, the Bank for International Settlement’s Innovation Hub unveiled plans for a private CBDC. The BIS has theoretically faulted skeptics’ claims that integrating privacy features with a CBDC is impossible.

According to the final paper for “Project Tourbillon,” published on November 29 by the Innovation Hub, the two prototypes presented have separate strengths. The first model focuses on payer anonymity, while the second is security.


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The paper also addresses the quantum question. It acknowledges that while quantum computing theoretically challenges current cryptographic systems, models exist that mitigate the risks.

Both models have hashing and lattice-based cryptography, which are cutting-edge solutions.

EC1 and EC2 Focus on Different Issues

Although the paper doesn’t focus on peer-to-peer payments, payer-to-merchant and their concurrent transaction archetypes with central and commercial banks were explored. KYC requirements for customers and merchants are compulsory in both instances, and they must have bank accounts.

Commercial banks must also have reserve accounts with their central banks. Once customers and merchants are in the banking system, they can install the Tourbillion app. Payments in “toubies” (TUB) are made and received via QR codes and other existing means.


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The e-Cash system focuses on single-use CBDCs that go through end-to-end signing processes before storage on the ledgers of both the central and commercial banks. The system has four unique denominations of 1,2,4 and 8 units.

In the E-Cash1 (EC1) scenario, the customer first withdraws the required amount of toubies from the commercial bank. The central bank signs the sent request and deducts the same amount from the commercial bank’s reserve account.

The commercial bank then sends the tokens back to the customer’s wallet. The generated tokens are “blinded” by unique identifiers, which allow the customer to remain anonymous to both parties.

The customer stores the tokens on a self-custody basis. When purchasing, the customer selects an item from the merchant and makes a payment request via a QR code.

The pending transaction and deducted tokens are then sent to the merchant’s institution and forwarded to the central bank. After checking the spent/unspent status of the tokens, the central bank debits the customer, adds the CBDCs to the spent ledger, and credits the merchant’s bank reserve account.

Lastly, the merchant then receives tokens.

While the central bank can monitor the general nature of the transactions within the ecosystem, merchants and customers remain anonymous. The EC2 process is also similar, except for two features.

The central bank maintains a list of unspent tokens, and spent tokens from customers are mixed before the central bank receives them.

Such a scenario, while preventing counterfeiting, also has privacy issues. Consequently, anyone with access to batch transactions could (potentially) figure out the identities of involved parties.

Quantum-Safe Computing Has Advantages and Drawbacks

The BIS tested both prototypes within its cloud infrastructure and focused on mobile payments. They also featured the ability to switch between classical cryptography and quantum-safe computing (QSC) for transactions.

QSC tests showed far slower transaction speeds and the inability to reallocate tokens to their respective lists. Additionally, processes also require higher computational and memory requirements.

The tradeoff between both systems may not yet exist. For a fully functional CBDC ecosystem to work, three factors are critical: privacy, scalability, and security.

Project Tourbillon may still be in its experimental stages, but critics and proponents alike will have a field day putting together and tearing apart its results.

Let the games begin!


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Walter Swift

Walter Swift

Walter Swift is an adept crypto writer, known for his deep insights into the decentralized world. His pieces artfully break down complex blockchain topics, making them accessible to a broad audience. With a passion for emerging technologies, Walter's articles are a beacon for crypto enthusiasts and novices alike.

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