Boston Fed, one of the 12 different Feds; He started infrastructure work for the digital dollar project. Boston Fed is investigating whether there is a blockchain network that could support a possible digital dollar project. In this direction, the Boston Fed has scrutinized 30-40 different blockchain platforms.
Fed Board Member Lael Brainard announced that they are continuing their research with the digital dollar a few weeks ago, and that they have received support from organizations such as MIT in the process. USA’s rival is China; While it has already begun testing its digital currency in big cities, it is not yet known at what stage the US is in digital currency.
Brainard’s statements did not resolve this obscurity, because it is not known exactly in which areas the Fed is doing research on the digital dollar and how fast these researches are progressing. But Boston Fed Vice President Jim Cunha would dispel some of the question marks in people’s minds by giving an interview about digital currencies.
At What Stage is Digital Dollar Studies?
CoinDesk learned how the digital dollar business is progressing by interviewing several Fed executives. Information gathered from these interviews shows that the Fed is currently only doing research, and that research is still very basic.
Jim Cunha; He says that they are currently doing research on distributed ledger technologies (DLT) such as blockchain. The Fed’s goal is to see whether DLT is sufficient to support the digital dollar project as a result of these investigations. Cunha says this about these studies:
“Distributed ledger technology; We are trying to see if a digital central bank to be developed by the USA can handle the burden of its money… We take a look at 30-40 different platforms, including open sources and private networks. Then we select a few of them and begin to examine them in more detail. Since we are at the beginning of the process, we are trying to look at the event from a wide perspective. ”
As stated by the Fed, Cunha, this process is still “at the beginning” and there is a lot to be done. These include examining concepts such as data privacy, scalability, and above all, deciding whether digital central bank money is a good idea.
Continues to Get Support from MIT
This is exactly why the Boston Fed is working with MIT. Collaborating with MIT’s Digital Currency Initiative (DCI), the Boston Fed said, “Does the digital dollar work?” trying to find the answer to the question. DCI Executive Director Neha Narula says the following about their work with the Fed:
“Our mission at DCI is to find out if digital central bank coins will work and what a central bank can do to issue its digital currency. Working with one of the world’s largest central banks makes it easy for us to answer these questions. ”
One of the important questions here is actually about how a central bank can issue its own digital currency. This question, which seems easy to answer at first glance, can be much more challenging than it seems. Because it is not even clear what kind of programming language to use for digital central bank coins. Beyond that, a central bank, especially a central bank like the Fed, does not have the luxury of using an ordinary algorithm. DCI Director Narula supports this by:
“We do not want to entrust America’s national currency to a newly emerged consensus algorithm or cryptography protocol.”
Work Will Continue For A Few More Years
All these explanations show that the Fed is actually at the beginning of this process and there is still a lot of work to be done. According to Cunha’s statements, the Boston Fed has been researching DLT since 2015-2016, but there are many questions that it has yet to find answers. However, despite the digital money initiatives of China and Facebook, the Fed is determined to advance this process without haste and cautiously. So much so that Cunha says digital money is “inevitable” and adds the following about the Fed’s digital dollar:
“I can say that I think the digital dollar will come to life one way or another. But this will take a long time. It’s not something that can change overnight, but a process that can take decades to complete. ”