Central bank digital currency (CBDC) has become one of the most talked-about topics in recent years, with several countries from across the globe considering the possibility of issuing one.
However, this project has often been hampered by a lot of complex challenges, including issues of design, which has prevented any country from launching their CBDC.
The American multinational payments technology company, Visa, has recently published new research which claims that it can create CBDCs that work offline.
According to the official blog post, the payment company reasoned that for the CBDC to effectively serve its purposes, which includes helping the unbanked to gain access to financial products within a country, it needs to have the ability to operate offline.
This ability allows it to be used by individuals who have little or no internet connection, thus, enabling financial inclusion.
The research revealed that Visa is developing a protocol that seeks to ensure that the CBDCs work as a perfect alternative to paper money. The protocol enables individuals to directly download the digital currency into their mobile devices, which is then stored in the device’s hardware and managed by the bank.
When conducting transactions with the stored CBDC, individuals can use some technologies that support point-to-point payments such as Bluetooth and Near Field Communication (NFC) to facilitate payments without any need for intermediaries or the internet.
With this protocol, individuals can enjoy an offline payment experience that is similar to physical cash. It also allows those with limited access to the internet connection to benefit from the CBDC project.
The payment company has allegedly been developing new products and capabilities, conducting their research, and evaluating the policy and economic impacts of CBDC to enable them to work with central banks in creating the digital currency in a way that it can easily integrate with the current payment system.
While some countries are still considering whether to issue a CBDC, some others are testing their projects on different industries within their economy.
The Swiss National Bank (SNB) recently completed its CBDC trial project dubbed “Project Helvetia” to settle large-scale transactions.
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Author: Obike Favour