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Swiss National Bank, BIS successfully trials anonymous CBDC
November 29, 2023
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Today the Swiss National Bank (SNB) and BIS Innovation Hub published a paper on Project Tourbillon, which explores privacy for a retail central bank digital currency (CBDC). The solution enables anonymous payments at scale. 

Privacy is one of the potential blockers to the adoption of retail CBDCs. There are two aspects to the concern. One is that the government can see precisely how you spend money. The other is that a government could prevent access to digital money. 

We believe solutions such as Tourbillon are significantly superior to others in protecting details about transactions in a cash-like manner. However, regarding the second point, all digital mechanisms will allow central banks to limit access. That applies equally to Canadian truckers and their bank accounts and Tourbillon style CBDCs. That doesn’t make this a bad solution, it’s just something to bear in mind.

Tourbillon is based on eCash developed by David Chaum, the inventor of DigiCash during the 1990s. 

One aspect of the trials used quantum proof encryption. Researchers found quantum cryptography significantly impacted performance and is an area where further work is needed. Another topic that was tested was eCash 1 versus eCash 2. This demonstrated tradeoffs between security and anonymity, which we’ll come back to.

Achieving anonymity despite being compliant

What’s clever about the solution is its novel approach to anti money laundering. It enables the payer and their transactions to remain anonymous, but not the recipient who has to hand over the CBDC to their bank.

That doesn’t mean the payer can use an illicit stash of money. Because the payer is issued the CBDC via their bank, which will have already conducted know your customer compliance.

Anonymity is achieved because when a bank issues the CBDC to their client, the bank doesn’t know the unique identity of the digital bank notes. It uses blind signatures. The analogy is that the consumer requests CHF 100 by putting the request with specific bank note numbers in an envelope. The bank doesn’t open the envelope but digitally signs the outside, enabling the issuance of the CBDC.

When the consumer pays a merchant using the notes, the merchant does not know the payer’s identity, similar to cash. 

eCash 1 versus eCash 2

In eCash 1, when the merchant deposits the CBDC received, the central bank adds the note to a list of spent funds. Whenever anyone makes a payment, it’s checked against this list to ensure the CBDC hasn’t been counterfeited to prevent double spending. This approach has two drawbacks. Firstly, if someone steals the central bank’s private keys, they could mint their own CBDC. And the central bank might have no idea about it. A second issue is that the list of spent notes to check against will grow, potentially impacting performance.

eCash 2 switches it around a little. Instead of the central bank storing a list of spent digital notes, it stores unspent CBDC. This solves both of the above issues. 

However, remember that envelope that the bank signed blind? The only person that knew the serial numbers of your digital money was you. Now the central bank knows them as well. To achieve anonymity an additional step is required.

At the point of issuance, the CBDC goes through a mix network. This is like a card shuffle where the serial numbers of your CBDC get shuffled with the serial numbers of several other people’s CBDC issued around the same time. Hence, nobody can tell who the serial numbers belong to. That’s unless there’s some underhand stuff happening through the mix network, which could undermine the anonymity. However, Chaum reckons he has a mix network design to address these concerns.

The Swiss National Bank has been working with Chaum for a couple of years. It started with a 2021 joint report with Thomas Moser, an alternate board member at the SNB. A year ago they co-published a paper on eCash 2.0. The SNB isn’t the only central bank to take an interest in eCash for CBDC. The Bank of Israel trialed eCash combined with Zero Knowledge Proofs.

IBM was the technology implementation partner on Project Tourbillon.

Meanwhile, the SNB is unlikely to issue a retail CBDC any time soon. On the other hand, it’s pretty advanced on the wholesale CBDC front. SIX Digital Exchange is currently using a wholesale CBDC in a production environment as part of Project Helvetia III.

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US Dept of Commerce to publish GDP data on blockchain

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List Of Cardano Wallets

Well-known and actively maintained wallets supporting the Cardano Blockchain are EternlTyphonVesprYoroiLaceADAliteNuFiDaedalusGeroLodeWalletCoin WalletADAWalletAtomicGem WalletTrust and Exodus.

Note that in case of issues, usually only queries relating to official wallets can be answered in Cardano groups across telegram/forum. You may need to consult with specific wallet support teams for third party wallets.

Tips

  • Its is important to ensure that you're in sole control of your wallet keys, and that the keys used can be restored via alternate wallet providers if a particular one is non-functional. Hence, put extra attention to Non-Custodial and Compatibility fields.
  • The score column below is strictly a count of checks against each feature listed, the impact of specific feature (and thus, score) is up to reader's descretion.
  • The table represents current state on mainnet network, any future roadmap activities are out-of-scope.
  • Info on individual fields can be found towards the end of the page.
  • Any field that shows partial support (eg: open-source field) does not score the point for that field.

Brief info on fields above

  • Non-Custodial: are wallets where payment as well as stake keys are not shared/reused by wallet provider, and funds can be transparently verified on explorer
  • Compatibility: If the wallet mnemonics/keys can easily (for non-technical user) be used outside of specific wallet provider in major other wallets
  • Stake Control: Freedom to elect stake pool for user to delegate to (in user-friendly way)
  • Transparent Support: Easy approachability of a public interactive - eg: discord/telegram - group (with non-anonymous users) who can help out with support. Twitter/Email supports do not count for a check
  • Voting: Ability to participate in Catalyst voting process
  • Hardware Wallet: Integration with atleast Ledger Nano device
  • Native Assets: Ability to view native assets that belong to wallet
  • dApp Integration: Ability to interact with dApps
  • Stability: represents whether there have been large number of users reporting missing tokens/balance due to wallet backend being out of sync
  • Testnets Support: Ability to easily (for end-user) open wallets in atleast one of the cardano testnet networks
  • Custom Backend Support: Ability to elect a custom backend URL for selecting alternate way to submit transactions transactions created on client machines
  • Single/Multi Address Mode: Ability to use/import Single as well as Multiple Address modes for a wallet
  • Mobile App: Availability on atleast one of the popular mobile platforms
  • Desktop (app,extension,web): Ways to open wallet app on desktop PCs
  • Open Source: Whether the complete wallet (all components) are open source and can be run independently.

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XDC: xdcc2C02203C4f91375889d7AfADB09E207Edf809A6

 

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