Cryptocurrency research being developed by MIT and the Federal Reserve Bank of Boston took a big step forward on Thursday, with the release of open-source code that could be used as a framework to advance research into a central bank digital currency, or CBDC, in the U.S.
Known as Project Hamilton, joint effort has developed two sets of computing source code, or “codebases,” for a hypothetical central bank digital currency. In joint statements, both organizations stressed that the work remains in an exploratory phase, and that the research is not intended as a pilot or for public deployment.
The collaboration was first made public in August 2020. The Project Hamilton software, called OpenCBDC, is a “theoretical high-performance and resilient transaction processor for a CBDC” and has been released under an MIT open-source license.
The white paper released Thursday detailed findings from the joint effort’s first research phase. In this phase, researchers selected concepts from cryptography, distributed systems, and blockchain technology to build and test platforms that would give policymakers substantial flexibility in the potential creation of a CBDC, they said.
“It is critical to understand how emerging technologies could support a CBDC and what challenges remain,” said Boston Fed Executive Vice President and Interim Chief Operating Officer Jim Cunha, in a statement. “This collaboration between MIT and our technologists has created a scalable CBDC research model that allows us to learn more about these technologies and the choices that should be considered when designing a CBDC.”
It is just one of several pieces of work being done on CBDC issues within the Federal Reserve system. The Boston Fed said it is conducting separate, unrelated evaluations of the pros and cons of a CBDC.
The team reportedly met its goal of creating a core processing engine for a hypothetical general purpose CBDC and explored it in two architectures. The work produced one code base capable of handling 1.7 million transactions per second, according to researchers.
“There are still many remaining challenges in determining whether or how to adopt a central bank payment system for the United States,” said Neha Narula, director of the Digital Currency Initiative at MIT. “Open-source software provides an important way to collaborate, experiment, and implement. In addition to supporting collaboration, monetary systems benefit from transparency and verifiability, which open-source offers.”
In the coming years, the second phase of the partnership is expected to enable Project Hamilton to explore alternative technical designs to improve privacy, resiliency and functionality, researchers said.
