[Cryptography] Am I missing something about CBDC ?

Robert Hettinga hettinga at gmail.com
Fri Dec 18 07:56:52 EST 2020

> On Dec 17, 2020, at 12:23 PM, Phillip Hallam-Baker <phill at hallambaker.com> wrote:
> This is how I would do it.
> Think of it as a return to 19th century banking. Every bank runs their own ledger. So there are 20 banks (say). Every transaction is between customers of the same bank or between the customer and their own bank.
> Interbank transfers are then handled by a system of settlements that clear daily/hourly whatever. Probably passing through the central bank or some other clearing house. And this last loop is the only part where real money is involved. 
> That is the way I would do it at any rate. Its just bank issued scrip.

CRESTCo is/was?(Bod is Old, CRESTCo got sold...) the equivalent of DTC for the UK and Ireland. 

We (IBUC) were working out with them how to hook a Chaumian mint into CREST, their database mirror of all the UK custodial bank positions. This was from July 2000 to 2001 or so.

It’s pretty simple really. Anybody could do it. We were talking to Clifford Chance, and they told us it would cost what it cost to set up CREST in regulatory dosh. About 10 million pounds (Y2K) in legal fees to re-iterate what they did when they set up CREST.

After that, set up a depository account. People transfer you assets, you become the material owner of those assets, issue blind signature notes for a fee representing a claim on those assets. The underwriter of the blind signature note gets to loan those assets for short-selling, etc., just like a bank does with cash, redeem/reissue of certificates for transfer would be free, conversion from book-entry to bearer form would be charged charged a fee. Little to no conversion fee to move an asset from the custodian to bearer certificate form. Pretty much like traveller’s checks, except for the redeem/reissue part.

If they’re thinking about doing this with a blockchain, though, I can’t see how much cheaper than an existing custodial relationship it would be for an institutional customer. Three orders of magnitude, etc. Underwriter keeps a copy of spent (redeemed) certificates just like the protocol says. MofN=2 gets you double-spenders, and no redemption. Stuff we all know here.

The dot-bomb kinda killed it, and 9/11 made the rubble bounce. Smoot-Hawley, and then KYC.

Anyway, the closer you get to T-0, the closer you get to bearer. It was ever thus. And “blockchain” is book-entry, not “tokens”, much less “bearer”.




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