PowerKee’s Bastion of Privacy #29 — Why CBDCs will fail to give the privacy assurances they claim
Fabio Panetta, an executive board member of the European Central Bank (ECB) has argued that the Digital Euro will be superior in terms of user privacy compared to privately issued stablecoins. Panetta based his argument on the premise that as a government entity, the ECB is not motivated to harvest user data for monetization purposes.
Panetta, who criticized the profit motive of private firms, confirmed that the ECB has carried out pilots on the proposed Digital Euro. According to him, the testing was in the form of offline payments for small amounts, in which no data is recorded outside the wallets of the payer and payee.
In the latest Bastion of Privacy, we detail the ongoing developments around Central Bank Digital Currencies (CBDCs) across different regions. We also consider the degree of privacy surrounding the use of such coins.
Development:
We’re rigorously testing our live wallet on the mainnet. We extended our current team further with a privacy coin expert to adjust economics in our ecosystem partly. The in-wallet staking option doesn’t work flawlessly yet, it’s not a code related issue it’s an issue connected to our customized ecosystem and associated rewards for setting a masternode. To summarize, the design is implemented into the code of the wallet at 80% now, the core functionalities of the wallet such as sending and receiving are working perfectly. After stress-testing the wallet on the mainnet over weeks now we found slight flaws in the in-wallet staking, this we’re fixing now. We’ll make it to the live version in a few weeks.
The ECB Digital Euro goals
The concept of national banks creating their own native CBDCs has been growing in popularity recently. Across various governments, potential use cases are being suggested, focusing on the advantages that the technology may have to offer. China ranks among the countries that has made significant progress towards issuing their own state-owned digital currency. The ECB has also gained grounds in its move towards launching a Digital Euro.
(Source: Laptrinhx.com/BIS)
Part of the goals of the ECB in creating a Digital Euro is to enable citizens in the Euro area to maintain costless access to a simple, universally accepted, safe, and trusted means of payment. Ultimately, the project aims to exploit the efficiency of digital payment systems, while maintaining the safety that is provided by central bank money.
Users are most concerned about privacy
According to a report that considers feedback from the public on CBDCs, the most important features of a Digital Euro would be privacy, security, and broad usability. Among the above-mentioned features, privacy concerns topped the list for users. However, any digital currency issued by government authorities will trade off privacy to enhance surveillance towards the prevention of illicit activities like money laundering or terrorist financing.
China’s CBDC project appears to be in the final stages of implementation. While the proposed efficiencies of a digital payment system seem enticing, the level of control and monitoring by the government will become a legitimate concern for citizens. Despite the ECB claiming to offer superior privacy compared to private stablecoin companies, users will still be concerned with the level of supervision and control that the government may have over their private transactions.
Privacy is not about comparison
For many cryptocurrency users, the issue of privacy is not a relative one that is based on comparing different services. It is an independent phenomenon that should provide them with satisfaction.
Towards that purpose, privacy-focused platforms like PowerKee have been developed to assure users that their data is secure and that their transactions are not monitored. If netizens are concerned about privacy, there are few options that are more suitable and usable than privacy-focused cryptocurrency networks.
The Digital Euro may have its relative advantages compared to stablecoins and other cryptocurrencies. However, privacy will certainly not be one of these advantages. Efficiency and broad acceptance will be the more likely candidates.
About PowerKee
PowerKee is a cryptocurrency network that makes privacy easy. Users can transact cheaply and instantly while maintaining anonymity. The PowerKee protocol uses a mixture of zero-knowledge proofs and coin mixing to provide strong privacy assurances to its users.
