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Technology Choices and Design Options

In: Decoding Digital Assets

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  • Leon V. Schumacher

Abstract

Summary This chapter on technology choices and design options for Central Bank Digital Currencies (CBDCs) covers a wide range of topics. It highlights the diverse design possibilities beyond conventional databases, distributed ledgers, and offline tokens, emphasizing the feasibility of integrating real privacy measures. The technical stack for CBDCs consists of several layers, including servers, software, network infrastructure, consensus mechanisms, and user devices, each playing a specific role. The comparison between databases and distributed ledger technologies (DLTs) reveals that databases excel in speed and scalability, while DLTs focus on security and immutability. The chapter also explores different CBDC implementations, such as account-based, token-based, and DLT-based solutions, each impacting privacy differently. It stresses the importance of cryptographic primitives in ensuring secure transactions and the potential challenges posed by quantum computing. Additionally, the roles of digital wallets, money custody options, backups, and hybrid systems combining DLT and database technologies are discussed, all critical in shaping the effectiveness, security, and user-friendliness of CBDCs.

Suggested Citation

  • Leon V. Schumacher, 2024. "Technology Choices and Design Options," Springer Books, in: Decoding Digital Assets, chapter 0, pages 209-244, Springer.
    • Handle: RePEc:spr:sprchp:978-3-031-54601-3_14
    DOI: 10.1007/978-3-031-54601-3_14
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