In cooperation with the US Federal Reserve and MIT University, a digital currency project was created under the control of the central bank, which uses parts of modern technologies but still functions as classic money.
The Boston branch of the US Federal Reserve, or simply Feda, has worked with the prestigious MIT to develop a proposal for a digital currency that the central bank could place and control (central bank digital currency or CBDC). The digital dollar, which has been talked about for some time, could take many forms, purposes and be based on many different technologies, and what was created in cooperation between the Fed and MIT is still a research project and proof of concept.
Open source technology
Their Hamilton Project, as they called this multi-year initiative, has so far gone through the first phase of research into a robust, fast, and fault-tolerant digital payment system, along with a flexible platform that supports multiple architectures, all open source. (which is posted on Github ).
The transaction processor set as the goal of the project was to guarantee the implementation of each payment in digital currency in a maximum of five seconds with a bandwidth of 100 thousand transactions per second. The CPU uses digital wallets and cryptographic keys, but instead of recording transactions on a distributed blockchain, a central institution, such as a central bank, is used. Transactions are still written in blocks, but the requirement was that one central institution has all the administrative rights over the digital currency – so in this case, it is not a distributed blockchain (which they also say sometimes creates bottlenecks).
Faster than expected
The authors say they have taken the best from the world of cryptocurrencies, cryptography, and distributed systems to get the ideal payment network that will meet the given conditions. In the end, they came up with a solution that significantly exceeded the set criteria. Their system is now able to execute more than 99% of transactions in less than 7 tenths of a second, while tests measured a maximum throughput of 1.7 million transactions per second, with more than 99% of them conducted in less than a second.
As one of the biggest advantages, the authors of the Hamilton Project point out the fact that they divided the processing of transactions into modules, ie separated the task of executing transactions from their verification, which allowed them faster data flow and scalability of modules as needed.
In the next phase, this project will be continued by researching new functionalities and alternative technical solutions, such as cryptography, smart contracts, offline payments, privacy, and the possibility of external audits of transactions. Work will also be done on protection against DDoS attacks, security, all while maintaining the openness of the entire solution.