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Article

A Digital Currency Architecture for Privacy and Owner-Custodianship

Centre for Blockchain Technologies, University College London, London DA13, UK
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Author to whom correspondence should be addressed.
Current address: 66–72 Gower Street, London WC1E 6EA, UK.
Academic Editors: Peter Kieseberg and Thomas Moser
Future Internet 2021, 13(5), 130; https://doi.org/10.3390/fi13050130
Received: 22 March 2021 / Revised: 4 May 2021 / Accepted: 5 May 2021 / Published: 14 May 2021
(This article belongs to the Special Issue Blockchain Security and Privacy)
In recent years, electronic retail payment mechanisms, especially e-commerce and card payments at the point of sale, have increasingly replaced cash in many developed countries. As a result, societies are losing a critical public retail payment option, and retail consumers are losing important rights associated with using cash. To address this concern, we propose an approach to digital currency that would allow people without banking relationships to transact electronically and privately, including both e-commerce purchases and point-of-sale purchases that are required to be cashless. Our proposal introduces a government-backed, privately-operated digital currency infrastructure to ensure that every transaction is registered by a bank or money services business, and it relies upon non-custodial wallets backed by privacy-enhancing technology, such as blind signatures or zero-knowledge proofs, to ensure that transaction counterparties are not revealed. Our approach to digital currency can also facilitate more efficient and transparent clearing, settlement, and management of systemic risk. We argue that our system can restore and preserve the salient features of cash, including privacy, owner-custodianship, fungibility, and accessibility, while also preserving fractional reserve banking and the existing two-tiered banking system. We also show that it is possible to introduce regulation of digital currency transactions involving non-custodial wallets that unconditionally protect the privacy of end-users. View Full-Text
Keywords: digital currency; CBDC; privacy; distributed ledgers; owner-custodianship; non-custodial wallets; shielded transactions; payments; e-commerce digital currency; CBDC; privacy; distributed ledgers; owner-custodianship; non-custodial wallets; shielded transactions; payments; e-commerce
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MDPI and ACS Style

Goodell, G.; Al-Nakib, H.D.; Tasca, P. A Digital Currency Architecture for Privacy and Owner-Custodianship. Future Internet 2021, 13, 130. https://doi.org/10.3390/fi13050130

AMA Style

Goodell G, Al-Nakib HD, Tasca P. A Digital Currency Architecture for Privacy and Owner-Custodianship. Future Internet. 2021; 13(5):130. https://doi.org/10.3390/fi13050130

Chicago/Turabian Style

Goodell, Geoffrey, Hazem Danny Al-Nakib, and Paolo Tasca. 2021. "A Digital Currency Architecture for Privacy and Owner-Custodianship" Future Internet 13, no. 5: 130. https://doi.org/10.3390/fi13050130

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