Digital US dollar edges towards reality as code developed by Boston Fed, MIT exceeds requirements

The work of creating a possible US digital dollar inched ahead on Thursday with initial research by the Federal Reserve Bank of Boston into the code that eventually could support such a currency.

The Boston Fed, in collaboration with the Massachusetts Institute of Technology’s Digital Currency Initiative, released a 35-page white paper on the findings of its technological research, which focused on developing software to process transactions. The researchers created and examined two possible code bases, including one that was capable of handling 1.7 million transactions per second.

“Both architectures met and exceeded our speed and throughput requirements,” the central bank branch said in an executive summary of the report. The researchers wanted to be able to process 100,000 transactions per second and settle them in less than 5 seconds. The two code bases beat those projections.

The joint research project is separate from the work being conducted by the Federal Reserve to study the possible benefits and risks of a US central bank digital currency, or CBDC. The Fed, led by chairman Jerome Powell, has indicated it does not plan to move forward with a government-backed coin unless it has the support of the White House and Congress.

“We believe that this is the best way to ensure that OpenCBDC is vetted by a large number of people – all of whom will bring unique knowledge, skills, and ideas for improvement,” Neha Narula, director of MIT’s Digital Currency Initiative, said on a call with reporters.

Thursday’s release concludes the first phase of the multi-year research initiative, known as “Project Hamilton,” that was announced in August 2020. A second phase will explore more complex capabilities and examine key issues, such as cybersecurity and how to balance user privacy with the need for transparency to deter criminal activity.