[Cryptography] Am I missing something about CBDC ?

[Nabil Alsharif]

Hi,

On 12/16/20 5:08 PM, John R. Levine wrote:
> I know all of the policy reasons why CBDC might or might not be a good
> idea. The question is how would they work, and the implications of
> what control the workings would allow.
>

The devil is in the details here. There isn't a common framework for how
CBDCs will work yet, so there is nothing to draw concrete conclusions
from. There are various options in how a CBDC _could_ be built, and
those options have trade offs and implications but without referencing a
specific CBDC you can't reference the options they've chosen and
therefore can't talk about the trade offs yet.

The paper you referenced in your original message does try to select
some various options that the author expects CBDCs to go with and even
with those options the devil in in the details. For example:

* The paper mentions that "The CBDC will incorporate programmable
money". Depending on how this is done you can make different
conclusions. If the "programing system" is Turing complete the you are
going to run into various smart contract hacks like you see in Ethereum
today. On the other hand, if the "programming system" is more limited
the you can make some assertions and guarantees about the contracts
(aka. programs) correctness, but you also limit the possible programs
that can be written.

* The paper states that "here will be no purely anonymous wallets" and
at the same time "Unhosted wallets will be possible" which to me are
contradictory statements. Even though a form of ID might be required to
create a wallet (i.e. get a private key authorized), since the wallet is
unhosted there is nothing that prevents that wallet from being stolen
(or sold) effectively making the new owner of the wallet anonymous.

I think it would be helpful if you could give us specific questions and
reference a specific CBDC implementation. In that case we might be able
to provide more concrete answers.

Cheers,
Nabil.
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