The research set out to create a processing engine for a hypothetical digital dollar.
The software, called OpenCBDC, is capable of processing 1.7 million transactions per second.
After almost two years of research, the Boston Federal Reserve Bank (FED) and the Massachusetts Institute of Technology (MIT) published a prototype that could serve as the basis for creating a digital dollar for the United States. The publication was made this Thursday, February 3, and included the technical documentation and open source software.
According to one Fed press release of Boston, the publication collects the results of the first of two phases of experimentation to explore different central bank digital currency layouts (CBDC, for its acronym in English) and gain a practical understanding of the technical difficulties involved in its development. The investigation was baptized as the Hamilton Project, the last name of the first Secretary of the Treasury of the United States, whose face appears on the 10-dollar bills.
The Fed clarifies that the Hamilton Project is an investigation “independent of the Federal Reserve Board’s evaluation of the pros and cons of a CBDC”, and does not seek to create a digital dollar for the United States. However, in April 2021, spokespersons for the institution stated that the project’s researchers were focusing their efforts on finding a robust platform that would respond to the needs of a central bank, such as the FED.
Two versions that exceeded expectations
Among the research findings, they highlighted the creation of OpenCBDC software, “a core processing engine for a hypothetical general-purpose CBDC,” the document states. The program is capable of processing up to 1.7 million transactions per second and completing settlements in less than two seconds in one of its versions.
Initially, MIT and the Boston Fed hoped to have the prototype process between 50,000 and 250,000 transactions per second and complete settlement operations in less than 5 seconds. The two versions of the developed software completely exceeded this expectation.
The researchers published the source of the software OpenCBDC in a GitHub repository, under open source license, in order to receive contributions. Additionally, they published a white paper (white book) of almost 40 pages, with all the technical documentation of the project.
Security and auditability issues remain pending
Boston Fed Executive Vice President and Acting COO Jim Cunha said the CBDC prototype they co-created with MIT is scalable and will allow moving into Phase 2 to “learn more about these technologies.”
For her part, Neha Narula, director of the MIT Digital Currency Initiative, believes that “many challenges remain in determining whether to adopt a central bank payment system for the United States.”
The whitepaper explains that among the issues that remain to be resolved in phase 2 of the project are “high security of issuance, auditability of the entire system, programmability, how to balance privacy with compliance, technical functions of intermediaries and resistance to denial of service attacks.
In early January of this year, the president of the Federal Reserve Bank, Jerome Powell, had anticipated that the digital dollar report, expected from September 2021, was ready. However, the official told lawmakers at the time that the delay was because “we didn’t get to where we needed to get to.”