Digital currencies can be sent from phone to phone

Digital currencies can be sent from phone to phone


MarketTechnology

Natalia Solovieva | 12/31/2020

Digital currencies can be sent from phone to phone

Visa, one of the largest international payment systems, has posted publicly a technical report titled “Towards a Two-Tier Hierarchical Infrastructure: An Offline Payment System for
Central Bank Digital Currencies ”(“ Towards a two-tier hierarchical infrastructure: an autonomous payment system for Central Bank digital currencies ”). In work authored by a number of experts,
specializing in security, cryptocurrencies, and electronic payments, discusses the benefits of Central Bank Digital Currency (CBDC), and describes
protocol of their use in offline mode (direct offline payments).

Central Bank Digital Currency or national cryptocurrencies is a digital analogue of the state currency, combining the capabilities of fiat (real) and electronic money. Perspectives
Issues of digital versions of their own (national) currencies are actively investigated and today by the Central Banks (mega-regulators) of almost all countries of the world, and some have already launched a project of a national digital asset in the “run-in” mode. As Christine Lagarde stated some time ago,
former Managing Director of the IMF, central banks should consider developing CBDCs – they could meet many public policy objectives, including financial
availability, security, consumer protection and payment confidentiality. However, unlike decentralized cryptocurrencies like Bitcoin and Litecoin, each country’s CBDC will be
controlled by one organization – the central bank.

Authors of a publication hosted in an open archive of scientific articles maintained and administered by Cornell University
(Cornell University) are investigating how central bank digital currencies, when available, can be used to make payments offline.

Central banks pay special attention to ensuring the availability of financial services, the document says. In view of this, it is necessary to take into account the structure of currency exchange using digital currencies when
either the buyer or the seller, or both parties do not have access to the World Wide Web when the available Internet connection is unstable, or when the user can only use the Internet
occasionally.

New Offline Payment System (OPS) Protocol for CBDC, proposed by authors, allows digital currencies to be downloaded directly to end users’ personal mobile devices
(smartphones, tablets). Currencies are stored in a secure module built into the device and managed by the issuer of the CBDC wallet. Cryptocurrency can be transferred from one device to another using
Bluetooth or NFC specifications. At the same time, the need for online communications with its traditional participants, such as banks, payment systems and
processing companies that authorize and process payment transactions.

“Our proposed development is a two-level hierarchical trust infrastructure, which is implemented using public key cryptography, with the Central Bank as the center
issuing root certificates for generating digital signatures, and with other financial institutions as intermediate certification authorities – designed to organize an easy and secure
issuance and transmission of CBDC. One of the important design features of such an infrastructure is the ability to create a sustainable payment system for consumers and businesses, allowing
carry out secure autonomous point-to-point operations (“point to point”, “device to device”) using authorized equipment and, thus, make transactions in
any situation, ”the document says.

Payment systems

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