The Office of Science and Technology Policy (OSTP), chaired by US President Joe Biden, has released a report analyzing 18 central bank digital currency (CBCC) design options that could be implemented in the US.
A technical analysis of the 18 CBCC design choices was conducted under six broad categories – participants, governance, security, transactions, information and adaptations. OSTP anticipates technical complexities and practical limitations when attempting to build a licenseless system managed by a central bank:
“Technology that promotes a hands-off approach can improve significantly over time, making it more suitable for use in the CBCC system.”
However, the analysis assumed the existence of a central authority and an approved CBDC system.
Helping policymakers decide on a suitable system for the US CBCC, the OSTP report highlighted the implications of including third parties in the ‘participants’ category in two design choices – transport coverage and interoperability. For management, the report weighed various factors related to permissions, access levels, identity privacy and optimization.
Other important factors OSTP wants policymakers to consider include encryption and secure hardware (for security), signatures, transaction privacy, offline transactions and transaction programming (for transactions), data modeling and record history (for data), and fungibility, limits, and fixes. Transactions and balances (for transactions).
The technical evaluation report of the US CBCC system highlighted the trend towards a hardware-protected system. As the US CBCC begins, the report highlights the various trade policymakers have decided to make as they finalize design choices.
Related: The White House publishes the ‘first’ comprehensive crypto structure
On September 8, OSTP recommended monitoring and regulation of crypto assets in the US while assessing the environmental and energy impacts.
A related OSTP report highlighted that crypto assets consume approximately 50 billion kilowatt-hours of energy in the US, which is 38% of the global total.
“It’s complicated to make a direct comparison with Visa, MasterCard and American Express combined […] Bitcoin and Ethereum consumed less than 1% of the electricity they used in the same year, even though they often run off of on-chain transactions and support their broader enterprise operations.
The report also pointed out that Proof of Work (PoW) on crypto assets consumes a lot of energy.