The Bank of England May Abandon Blockchain When Introducing its Cryptocurrency
The digital pound, developed by the Bank of England, may operate on software that is not based on blockchain — a distributed ledger technology underlying cryptocurrencies and other virtual assets. Discussions regarding which technology to use are still ongoing, according to Bloomberg.
The design of the future central bank digital currency (CBDC) of the United Kingdom is planned to be built on principles of anonymous and confidential usage. However, there is currently uncertainty regarding the use of blockchain technology for the digital pound. The Bank of England is considering several registry technologies that could serve as an alternative to blockchain for the creation of the British CBDC.
According to Tom Mutton, the Director of Financial Technology Development at the Bank of England, discussions about the development plans for the digital pound, known as Britcoin, were initiated by the Bank of England and the UK Treasury in April 2021. In February 2023, a consultation document describing the future design of the digital pound was published, and a dedicated working group was formed.
Currently, the Bank of England and the Treasury are actively seeking feedback from stakeholders and technology experts regarding the proposed design of their CBDC. The feedback period will continue until the end of June.
During a recent meeting of technologists organized by the Bank of England to discuss the design of the digital pound, there were differences of opinion regarding the use of a registry for the CBDC. As a result, the bank is considering multiple registry technologies.
Tom Mutton presented the overall results of the working group's efforts to journalists. He stated that the digital pound ecosystem will not collect personal information. The Bank of England will only have access to the total transaction amount, without information about the individuals conducting those transactions. On the other hand, wallet providers will have access to user data but will not be able to view transaction data.
The official assured that neither the Bank of England, the government, nor digital wallet providers will have comprehensive access to personal data that would allow for the identification of digital pound users and the linking of their financial operations. In specific cases, digital wallet providers would need to obtain special user permission to store certain data.
With a particular focus on retail trade, the Bank of England has previously mentioned that the digital pound could coexist with private stablecoins.