By George Ward
The race for central bank digital currency (CBDC) development is heating up, with several jurisdictions putting more effort into establishing their national virtual token. In the United Kingdom, the Digital Pound is the topic of debate among policymakers, with speculations indicating that the asset might not be hosted on a blockchain.
Creating The Pound Digital
The United Kingdom has joined the group of nations making remarkable progress in developing their CBDC. However, the journey ahead will be prolonged as debates continue regarding the official terminology for the Digital Pound.
Deep within the corridors of the Bank of England (BoE), the visionary minds spearheading the creation of the Digital Pound find themselves entangled in a never-ending debate. Their discussions reportedly revolve around a crucial question: should this revolutionary coin operate on distributed ledger technology (DLT) foundations, like blockchain?
Another critical concern that emerges is how to strike a delicate balance between privacy and transparency. In this case, the prevailing argument is that the Digital Pound, also called Britcoin, should be pseudonymous.
This stance aims to safeguard individual privacy while ensuring a semblance of accountability within the digital economy. So far, no one knows what blockchain the proposed token would run on and whether it would involve a blockchain platform.
According to Tom Mutton, the head of the CBDC project at the BoE, the participants at the bank’s hosted event failed to agree on how the Digital Pound will be designed. Furthermore, the Bank of England and His Majesty’s Treasury have reportedly decided to seek feedback from stakeholders and technology experts regarding the development of Britain’s national digital currency.
Meanwhile, the timeline for receiving feedback will close on June 30, leaving little time and a lack of consensus on the proposed token’s fundamental blueprint. Thus, stakeholders still need to meet, discuss and agree on the asset’s design.
However, the bank has revealed that it plans to test different ledger technology to determine the best blockchain platform for its CBDC project.
Could Britcoin Be A Financial Monitoring Tool?
One of the main concerns expressed by observers is user privacy and whether Britcoin would not be used to collect individual data. However, the bank’s head of CBDC explained that private sector players would be expected to handle the project’s innovation while the BoE would oversee the infrastructural aspect.
According to Mutton, an assurance notice will be released stating that no data will be shared with the Central Bank. While the occurrence of transactions will be known in real-time, no information about the individuals involved will be retained.
Securing user data lies with the wallet provider, but they will not have access to the transaction data. In contrast, the United States is divided on both sides of the political divide, with the presidential hopefuls from the Democrat to the Republican Party opposing the development of a CBDC.
The prevailing concern surrounding the potential introduction of a centralized digital asset in the United States is that it could pave the way for extensive financial surveillance and unwarranted political interference in individuals’ spending activities. Critics argue that implementing a CBDC would enable authorities to monitor and track every transaction closely, thus eroding individuals’ privacy and autonomy over their financial decisions.
Moreover, skeptics also raise concerns about potential political interference through government restrictions or censorship on certain transactions. They fear that a CBDC could give authorities high control over citizens’ financial lives, allowing them to impose restrictions based on political agendas or ideological motivations.
As a result, financial privacy and civil liberty advocates express deep reservations about introducing a CBDC in the US. They consider it a threat to personal freedom and suggest that the government refrain from developing the token in the best interest of the nation’s residents.