The world has recently made an overview of what a digital dollar, or at least one component of a hypothetical, the digital currency of the central bank of the United States could resemble, graciousness of Project Hamilton, an effort of collaboration of the Federal Reserve Bank of Boston and MIT Digital Currency Initiative. The results of the first phase of the project were originally planned last summer, but were published on February 3. The project, announced in 2020, is appointed in honor of Alexander Hamilton, the first American secretary of the Treasury, and Margaret Hamilton, a MIT staff who contributed to the Apollo program of NASA.
Researchers have developed two open source models for transaction processing software, called OpenCBDC, for the “Technology-Amnostic” project. The researchers note in the white paper of the project that “technical and political choices are very interdependent and that these choices are more granular and with more permutations than commonly discussed.” Only one of the models used the technology of the big book distributed, and it turned out to be the less satisfactory solution, the technology described as “not necessary”.
The big book model distributed was “not a good game” for the project because of its performances. The project assumed the administration by a central player and the model was modified accordingly. However, he has created bottlenecks of performance and the requirement that the central transaction processor maintains the history of transactions has considerably slowed down flow. The two -phase validation architecture of the alternative model supported “a range of potential confidentiality options” without central storage of the transactions history, although the researchers recognized that it presented greater challenges for the audit.
The distributed register model had a cutting -edge flow of approximately 170,000 transactions per second, while the competing model, which treated transactions in parallel on several computers, experienced a flow of 1.7 million transactions per second and showed linear scalability with the addition of more servers.
The second phase, and apparently the last, of the Hamilton project “will determine the technical and performance compromises associated with various conceptions”. The researchers promised to examine “confidentiality, auditability, programmability, interoperability and even more”. The executive vice-president of Boston Fed, Jim Cunha, declared in a press call that “we will define a certain number of use cases which focus on the various conceptions and possibly political questions”, adding: “For example, if a political objective was to maximize confidentiality, and the other is to stop criminal activity, these create conflicts from a technological perspective the system. “
The release of the results of phase 1 of the Hamilton project comes simultaneously with the China’s attempt to increase its deployment of the digital yuan at the Winter Olympic Games. The contrast between the level of development of CBDCs in the United States and China could not be more severe, and those who have endeavored by the Hamilton project have struggled not to overestimate the place of the project in the American development of the CBDC. The director of the MIT digital currency initiative, Neha Narula, said in a statement: “It is important to note that this project is not a comment on the question of whether the United States should issue a CBDC-but work like this is essential to help determine the answer to this question.” She added: “The political conversation around the digital currency of the Central Bank is still in its infancy.”
The dispersed nature of this conversation is apparent at a glance. The Fed firmly refuses to take a position on a CBDC, reiterating its neutral position in an article published last month. The same week, representative Tom Emmer, a Minnesota republican, presented a bill to prohibit the Fed from publishing a retail CBDC, affirming that such a law would prevent the Fed from an “insidious path” to authoritarianism. Shortly after, Bank of America published a ticket calling an “inevitable” CBDC. The Fed is welcoming comments on the Hamilton project via an online form with 22 questions. The project also hires a new product management director.
