This article was first published on Insights – Ripple
Ripple is piloting a private version of the public, open-source XRP Ledger that provides Central Banks a secure, controlled and flexible solution for the issuance and management of digital currencies.
With over 80% of Central Banks actively exploring some form of sovereign-backed cryptocurrency, new Central Bank Digital Currencies (CBDC) are bound to emerge. Each new CBDC will have unique goals driven by the specific market challenges and opportunities of its country, unavoidably leading to different technologies and implementations — leaving the world with an array of CBDC solutions.
Distributed ledger technology will be the basis for most CBDCs, just as it is for today’s cryptocurrencies. While Central Banks can tap into existing blockchains to get CBDCs up and running quickly, most ledgers are not built for payments and cannot handle the volume of transactions that a successful retail CBDC will require.
Most blockchains are public ledgers, visible to all and updated by a broad network of validators. A Central Bank requires more transaction privacy and control over its currency than a public ledger can offer, so will most likely opt to create a CBDC on a private ledger that can also operate at the required scale.
Additionally, interoperability – the ability for a private ledger to connect with today’s existing global financial infrastructure, as well as other CBDCs and other digital currencies– will be critical. In fact, in its 2021/22 innovation program, the Bank for International Settlements identified interoperability for cross-border payments as a major priority for CBDCs.
The CBDC Private Ledger
The CBDC Private Ledger is based on the same blockchain technology that powers the XRP Ledger (XRPL), which means that the CBDC Private Ledger is built for payments.
This also means the CBDC Private Ledger is designed for issuing currencies, with over 5,400 ...
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