Ripple is testing a private version of the open source public XRP ledger, which provides central banks with a secure, controlled and flexible solution for issuing and managing digital currencies.
With over 80% of central banks actively looking for some form of cryptocurrency with government support, new Central Bank (CBDC) digital currencies are certain to emerge. Each new CBDC will have unique goals, determined by its country’s specific market challenges and opportunities, inevitably leading to different technologies and implementations – and providing a range of CBDC solutions to the world.
Distributed ledger technology will be the foundation for most CBDCs, just as it is for today’s cryptocurrencies. While central banks can use existing blockchains to get CBDCs up and running quickly, most ledgers are not designed for payments and cannot handle the volume of transactions a successful CBDC needs for retail.
Most blockchains are public ledgers that are visible to all and updated by a wide network of reviewers. A central bank needs more transaction protection and control over its currency than a public ledger can provide. Therefore, it will most likely create a CBDC for a private general ledger that can also be operated to the extent necessary.
Additionally, interoperability – the ability of a private ledger to connect to today’s global financial infrastructure, as well as other CBDCs and other digital currencies – is vital. In fact, the Bank for International Settlements has made interoperability for cross-border payments a top priority for CBDCs in its 2021/22 innovation program.
The CBDC Private Ledger
The CBDC private ledger is based on the same blockchain technology that powers the XRP ledger (XRPL). This means that the CBDC private ledger has been created for payments.
This also means that the CBDC Private Ledger is designed for issuing currencies. Over the past 8 years, over 5,400 currencies have been issued on the XRPL, including the native digital asset XRP, which can be used as a neutral bridge value for smooth movement of value between CBDCs and other currencies.
Moving money in the CBDC Private Ledger is inexpensive, reliable, and almost instantaneous. Transactions can also be made in amounts required by central banks. The CBDC Private Ledger initially processes tens of thousands of transactions per second (TPS) with the potential to scale to hundreds of thousands of TPS over time.
Transactions in the CBDC private ledger are checked using the same consensus protocol that is used in the XRP ledger. It’s far less energy-intensive, and therefore cheaper and 61,000 times more efficient than public blockchains that use proof of work.
In addition to using XRP ledger technology, the CBDC Private Ledger is also supported by RippleNet technologies and the Interledger protocol suite to enable use cases with ultra-high throughput such as micro payments.
The CBDC Private Ledger meets even the highest security standards for central banks, with each bank having complete sovereignty and adaptability based on its own data protection and policy requirements. The core technology behind this new CBDC Private Ledger has been running for more than 8 years without incident and with transactions in the billions every day.
Time to define the future of money
Ripple has proven to have successfully connected different payment systems and advocates the use of blockchain for solving global payments. Trusted by hundreds of financial institutions around the world.
We are currently working with central banks around the world to better understand their goals and how the CBDC Private Ledger can help achieve those goals.
We believe this solution will address the major challenges of creating and managing a sovereign digital currency while increasing the value and benefits for central banks, their partners and, most importantly, the millions of people who will use it.
And we’re just getting started. We are also working on a new approach whereby central banks will be able to join a network of CBDC ledgers that will allow full settlement interoperability and allow each member to maintain their monetary and technological independence. We believe this will be vital for central banks and look forward to sharing more details on how it works soon.
Contact email@example.com to find out how your business can get involved and together define the future of money.