- The Bank of England is investigating privacy risks of Central Bank Digital Currency (CBDC) for retail use, with the assistance of UK tech company, Nuggets.
- Nuggets is providing technology for privacy and identity management of the digital pound and is involved in the international study, Project Rosalind.
In the continually advancing world of blockchain and digital currency, The Bank of England (BoE) is stepping forward, investigating the potential privacy risks in the operation of retail Central Bank Digital Currency (CBDC). The British tech company, Nuggets, renowned for its expertise in Web3 technology and payment services, is providing the necessary technology for privacy and identity management of the prospective digital pound.
A CBDC is a digitized version of a country’s currency, issued by its central bank. It is primarily used for wholesale transactions among financial institutions and for retail purposes targeting the general public. In this context, the BoE and Nuggets are examining the use of the CBDC for retail operations.
Nuggets provides solutions for privacy concerns and surveillance related to retail CBDC. Through the implementation of Self-Sovereign Decentralized ID (SSDID), Nuggets aims for reliable transactions in compliance with legal regulations. The company is currently participating in ‘Project Rosalind’, an initiative collaboratively run by the BoE, Bank for International Settlements (BIS), and European Central Bank (ECB) to study the operation of retail CBDCs. The project focuses on testing the technical feasibility of retail CBDCs and demonstrating their effectiveness.
Recently, Nuggets began researching and designing privacy and security solutions for the digital pound at the BoE’s request. Their goal is to create a secure, private system that prevents transaction tracking while also curbing fraud and money laundering.
As part of its privacy measures, the BoE’s project plans to use ‘Zero-Knowledge Proof’ (ZKP), a cryptographic technology. This technology enables operations such as freezing, unlocking, and deletion of CBDC accounts without having to share personally identifiable information.
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Bank of England and CBDC
In February 2023, the BoE sought public opinions about its plans to digitize the pound. Finance Minister Jeremy Hunt exhibited a positive stance towards the introduction of a CBDC at that time. While physical cash will likely never become obsolete, a digital pound guaranteed by the BoE could be accepted as a trustworthy, accessible, and user-friendly payment method.
Over the next two years, the BoE plans to progress the experimental and design stages of the digital pound, based on which it will decide whether to proceed with its development. The pilot testing of the CBDC is not expected to begin until at least 2025.
Founded in 2016 by CEO Alastair Johnson and co-founder Seema Kinda Johnson, Nuggets offers various services besides providing CBDC wallet solutions. These include voting systems in Decentralized Autonomous Organizations (DAO) and the development of wallets compatible with ZK Rollups.