The Bank for International Settlements (BIS) has today released a new report from Project Tourbillon. In an era where digital transactions are rapidly outpacing cash, Project Tourbillon aims to explore the intricate balance of privacy, security, and scalability in Central Bank Digital Currencies (CBDCs). This project, a response to the global decline of cash usage and the surge in digital payments, delves into the complexities of maintaining user privacy while adhering to essential public policy objectives.
Privacy at the Forefront of CBDCs
Central to Project Tourbillon is the introduction of a novel privacy paradigm: payer anonymity. This approach allows consumers to execute transactions without revealing personal information to merchants, banks, or even central banks. Instead, the identity of the merchant is the only detail disclosed, and this too is kept confidential within the merchant’s bank. This concept of payer anonymity addresses the increasing public concerns about privacy erosion in digital transactions.
Innovations in Security and Scalability
Project Tourbillon doesn’t stop at privacy. It integrates quantum-safe cryptography to bolster security against emerging threats, including those from quantum computing. However, the project also highlights the challenges associated with this technology, such as slower performance and reduced functionality.
In terms of scalability, Project Tourbillon successfully tested two prototypes, eCash 1.0 (EC1) and eCash 2.0 (EC2), based on the eCash design by Chaum (1982). These prototypes demonstrated the capability to handle a growing number of transactions efficiently, an essential feature for widespread CBDC adoption.
Balancing Act: Privacy vs. Security
A key finding of the project is the trade-off between privacy and security. While EC1 offers unconditional payer anonymity, EC2 boasts stronger security features, indicating a potential compromise between the two aspects. This balance is crucial for CBDCs to function effectively in the real world.
As the first step in a much larger journey, Project Tourbillon sets the stage for future advancements in the realm of CBDCs. The roadmap includes further development of quantum-safe cryptography, enhancing the design for better speed and functionality, and exploring sustainable business models. This project marks a significant milestone in the evolution of digital currencies, promising a future where privacy, security, and scalability coexist harmoniously in the world of CBDCs.