White House OSTP Department Analyzes 18 CBDC Design Choices for the United States

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Led by United States President Joe Biden, the Office of Science and Technology Policy (OSTP) submitted a report analyzing design choices for 18 central bank digital currency (CBDC) systems to possible implementation in the United States.

The technical analysis of the 18 CBDC design choices was conducted across six broad categories – participants, governance, security, transactions, data, and adjustments. The OSTP foresees technical complexities and practical limitations when attempting to build a permissionless system governed by a central bank, adding:

“It is possible that the technology underpinning a permissionless approach will improve significantly over time, which could make it more suitable for use in a CBDC system.”

However, the analysis assumes that there is a central authority and an authorized CBDC system.

To help policy makers choose the ideal CBDC system in the United States, the OSTP report highlighted the implications of including third parties in both design choices under the “participants” category – transport layer and interoperability. For governance, the report assessed various factors related to authorization, access prioritization, identity privacy, and remediation.

The OSTP wants decision makers to consider other important factors, including cryptography and secure hardware (for security), signatures, transaction confidentiality, offline transactions, and transaction programmability (for transactions). ), data model and general ledger history (for data) and fungibility, holding limits and adjustments on transactions and balances (for transactions).

The technical evaluation of a CBDC system in the United States highlighted the trend in the report towards a hardware-protected off-registry system. When launching an American CBDC, the report will possibly highlight the various trade-offs that policy makers decided to make when finalizing design choices.

Related: White House releases ‘first-ever’ comprehensive framework for crypto

On September 8, the OSTP recommended oversight and regulation while weighing the environmental and energy impact of crypto assets in the United States.

The related OSTP report pointed out that crypto assets use around 50 billion kilowatt-hours of energy per year in the US, or 38% of the global total, while adding:

“Noting that direct comparisons are complicated, Visa, MasterCard and American Express combined […] consumed less than 1% of the electricity that Bitcoin and Ethereum used in the same year, despite processing several times more on-chain transactions and supporting their broader enterprise operations.

The report further noted the high power consumption of proof-of-work (PoW) staking in crypto assets.

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