Atlantic Council Examines How Central Banks Might Keep Their Digital Currencies Secure

The Atlantic Council, a think tank in the United States, presented a paper on cybersecurity vulnerabilities surrounding central bank digital currencies on Wednesday (CBDC). The writers present a broad overview of CBDC security, but with a special focus on the United States and its challenges.

iexclusivenews reports that they discovered that the security concerns posed by a CBDC are highly influenced by its design. Different designs balance performance, security, and privacy in different ways. Only three of the six design solutions examined in the paper are currently being studied or implemented in the real world.

This online news outlet understands that consumers’ privacy has been highlighted as the most significant concern posed by a CBDC. A CBDC might maintain a record of user behavior and transactions in some designs, posing the danger of not just money theft but also personal information theft. According to the report:

“A CBDC could contain large volumes of personally identifiable information ranging from what prescription drugs you buy or where you travel each day.”

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Reduced regulatory control was also viewed as a concern associated with the implementation of any CBDC. Nonetheless, enhanced privacy can improve security while still offering “some amount” of regulation, according to the paper.

What You Should Know

According to the study, the Fourth Amendment of the United States Constitution. Which protects against excessive search and seizure, should apply to the CBDC ledger. Requiring prosecutors to seek a court-issued warrant before gaining access to it. Related: According to HyperLedger director Barbosa, “CBDCs are the inevitable development.”

A number of recommendations regarding the creation of a CBDC were included in the study. It underlined that the present wholesale and retail payment systems confront considerable and complicated threats. Many of which are similar to those faced by CBDCs, and advised that CBDCs be protected by utilizing existing security mechanisms whenever practicable.

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The rapid recovery of payment volumes on Fedwire. The United States Federal Reserve’s domestic money transfer system, following the September 11, 2001, terrorist attacks. Which took out vital infrastructure, was highlighted as proof of the system’s resiliency.

Meanwhile, iexclusivenews Nigeria reports that the 2016 hacking of the Bangladesh Bank was held up as an illustration of the public-private wholesale payment system’s overall fragility. In addition, the paper reviewed the 20 pieces of CBDC-related legislation now before the United States Congress.