Ongoing Experiments with a Digital YenAnnabella Cornelly
Asian countries are known for their progressive views and readiness to try new projects. This time, the Bank of Japan reported a few days ago that the institution is ready to carry out experiments with a CBDC. Officials wish to test its feasibility taking into consideration from a technical point of view. Analysts admit that there might be quite promising perspectives and what the authorities are doing will bring great results.
The official representatives of the bank announced that they were fully prepared for an experiment with a digital Yen. It’s necessary for the government to digitize money. However, it is not less important to see whether the country can catch up with others, for example, China. The latter has already started testing its digital currency. Journalists mention that the bank has revealed plenty of details related to the process, but they will reveal a timetable some time later.
In a document known asTechnical Hurdles for CBDC, the ban’s officials state it would test the feasibility of the new money from technical aspects. They are ready to establish partnerships with other banks. Soon, they will contact relevant institutions and make a plan to introduce a digital currency.
Half a year ago, news agencies reported that British banksannounced a scheme to co-work on studying issuing digital currencies. Everything was done in a partnership with other EU countries. The list includes Switzerland and Sweden. More than that, Canadian and Japanese banks took part in the processes and research.
Some of the Greatest Hurdles
In a number of reports, the Bank of Japan mentions a couple of key technical challenges. First, it’s universal access which provides accessibility to all people and even those who do not have smartphones. Second, it’s resilience.
Interestingly enough, surveys show that two years ago almost thirty-five percent of the population didn’t have smartphones. The bank says it is essential to create the currency to be accessible to a whole variety of customers.
If talking about resilience, then we should remember that it refers to offline availability even if and when there is no electricity or power is shut. Project developers need to create something that would work in any sort of environment and this would include such natural phenomena as earthquakes.
Digital money and blockchain go hand in hand. However, the authorities and official representatives of the bank are still considering this option. They haven’t yet decided whether they will use blockchain for the new currency. As we know, any centralized system has its own advantages. For instance, they have huge capabilities and their transaction speed is high. Nevertheless, the system can go down in case it faces a single case of failure.
In comparison with currencies based on DLT, others cannot solve a single point of failure. Then they demonstrate resilience and take more time to transact. This happens simply because networks need consensus and the process involves several validators.
China has already tested the country’s digital currency. A number of tests were carried out in four cities. According to developers, their project has been quite successful and the team is prepared to continue their research projects.
All experts admit that centralized types have their pluses and minuses. On the other hand, a decentralized form can boast several major advantages, and yet they have a number of disadvantages, too. In some instances, the centralized alternative would be of greater use. If the amount is limited and the most important aspects still remain future and resilience, then the decentralized system would be preferred.
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