It’s hard to talk about the CBDC race without mentioning China. However, as more countries explore government-backed digital currencies, central banks sometimes have no choice but to go for altcoin solutions.
Recently, Stellar published a post on the case of CBDC in its blockchain.
With a focus on asset issuance, Stellar has proposed a number of features to appeal to central banks, including customizable settings for content access, automated interoperability, and features to get funds back from user accounts.
But most of all, Stellar’s Consensus Protocol (SCP) will include KYC.
“… SCP relies on validators operated by organizations with verified identities instead of anonymous nodes.”
It takes about five seconds for the validator to be accepted. Issuers such as central banks can also select and operate their own validators. In addition, banks are not forced to use only XLM and be able to “spend their own assets”.
Stellar vs. Ripple
In addition to the case for CBDC, MoneyGram officially announced a partnership with the Stellar Foundation following the split from Ripple, as the giant has come into a lawsuit with the SEC. Both messages pushed XLM price nearly 20% to an intraday high of $ 0.368. In addition, the token has risen three places in a row from 26 to currently 23, with an explosive trading volume of 173%.
What is the common point between # 23 and # 6? The answer is Jed McCaleb – co-founder and CTO of Stellar who was founder and CTO of Ripple until 2014.
Now it looks like the two companies are getting into a CBDC race. The National Bank of Ukraine is reportedly testing a CBDC on the Stellar network, but the start date has not yet been set. Meanwhile, Ripple recently partnered with the Royal Monetary Authority of Bhutan to test a CBDC. It also tested a native version of the XRP ledger designed specifically for central banks.
Environmental friendliness is another aspect. The XRP Ledger website claims that a single XRP transaction uses 0.0079 kWh / tx of electricity. Visa now only costs 0.0008kWh / tx. Stellar’s whitepaper for CBDC claims that its power consumption for a transaction is “similar to that of the Visa network”.
In addition, smart contracts are an important part. Ripple has proposed a federated sidechain for the XRP ledger to provide intelligent contract functionality. The system is currently in the preview phase.
In the meantime, Stellar noted:
“Stellar does not have any smart contracts of this type, but in most cases they are not necessary for the programmability of the CBDC and represent a security risk.”
The race has started
IMF Executive Director Kristalina Georgieva recently released a remarkable statistic that 110 countries are considering CBDCs. As central banks turn to altcoin companies, how will decentralized technology providers meet the needs of centralized regulators?
Perhaps Ripple or Stellar could be among the first to find an answer.
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