Ethereum as the basis of CBDC: Australia introduces eAUD
Can a CBDC be built on the basis of the Ethereum blockchain? Australia is introducing its eAUD with exactly this plan. The Australian central bank’s project also surprises with a few other details.
CBDC in Australia: white paper published
While many other countries have been working on their own digital central bank currency for some time, the Australian central bank is now announcing the launch of a CBDC in Australia.
The Chinese eYuan, which has been in the pilot phase since January 4, gained particular notoriety. Other countries such as Ecuador have already abandoned the concept. The South American country introduced a CBDC back in 2014, clearly ahead of the global trend.
The electronic Dinero was abolished just three years later. The digital currency met with a lot of resistance from the residents of the country.
The Australian central bank, in cooperation with the Digital Finance Cooperative Research Center (DFCRC) , apparently gave serious thought to the project in advance. People seem to want to stay away from a CBDC that is only helpful to the authorities.
The DFCRC is an Australian research organization focused on digital finance. There are links with the Australian state.
What makes the eAUD special?
The eAUD should be able to be used in combination with smart contracts. In this way, automatic transactions are possible when certain events occur. In addition, one plans to use the currency within multisig wallets.
This allows payments to be processed with more than just two participants. Likewise, the use of a trustee could be beneficial. This function is also to be made possible for users.
Compared to most bank transfers, the CBDC can of course score with its fast 24/7 use.
Although the wealth of functions sounds like a big chunk of work at first, the hurdles are actually very small. Ultimately, Ethereum provides all these functions itself and since Australia is actually planning its CBDC as an ETH token , it does not need its own blockchain for it .
The eAUD is scheduled to start a pilot phase by mid-2023. Selected industrial users can participate in the project. The central bank is hoping for active participation. It is not yet clear whether a full version will ever appear. It depends on the experience gained.
Ethereum as the basis of CBDCs – a better alternative?
For all sides, the use of Ethereum as the basis of a CBDC may sound contradictory at first. The respective government then relies on a blockchain over which it cannot exercise complete control.
In fact, however, it is possible for the issuer of an ETH token to make decisive decisions about it. The blocks of USDT and USDC by the respective publishers Tether and Center are known.
The Australian central bank has the same option. Unwelcome users could then lose access even though the money is not in third-party custody.
In fact, the eAUD white paper also shows that concessions are being made to users. This is how you want to create a higher level of privacy than is usual with most ERC-20 tokens and CBDCs.
Users would then be able to hide their account balance and transactions. Only the central bank can see these details at any given time. Optionally, these can be shared with desired service providers. An item intended to increase utility in certain applications.
The white paper particularly emphasizes that the identity of the user is not linked to their wallet. Even the central bank cannot easily identify users.
The total state surveillance by a CBDC feared by the crypto scene could be sidelined thanks to Ethereum.