Project Hamilton Phase I: Federal Reserve Bank of Boston and MIT test high-performance and resilient transaction processor to handle CBDC transactions

This blog had pointed that Boston Fed and MIT’s Digital Currency Initiative decided to collaborate on CBDCs.  They named it as Project Hamilton.

The Project has released the findings of their initial tech research on CBDCs:

The Federal Reserve Bank of Boston and the Digital Currency Initiative at the Massachusetts Institute of Technology today released the findings of their initial technological research into a central bank digital currency, or CBDC. The published research describes a theoretical high-performance and resilient transaction processor for a CBDC that was developed using open-source research software, OpenCBDC. This collaborative effort, known as Project Hamilton, focuses on technological experimentation and does not aim to create a usable CBDC for the United States. The research is separate from the Federal Reserve’s Board’s evaluation of the pros and cons of a CBDC.

“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. “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.”

The whitepaper released today details findings from the 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. The paper describes the following findings:

• • The team 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.
  • The vast majority of transactions reached settlement finality in under two seconds within architectures that support secure, resilient performance and offer the significant technological flexibility required to adjust to future policy direction.

There are more details on MIT’s DCW website. Apparently they are doing all this on an open source code- OpenCBDC:

The Project Hamilton software, called OpenCBDC, has been released under an MIT open-source license as well. It is one piece of work among others being done on CBDC issues in the Federal Reserve system.

To be sure, any steps toward a digital version of currency would involve many additional policy decisions and software features that would need to be settled by the U.S. Congress and other regulatory experts. As the team points out in the paper’s executive summary, “several technical design questions remain open for investigation. The answers to these questions will have meaningful implications and consequences for what options are, or are not, available for policymakers.”

Indeed, Narula emphasizes, “The policy conversation around central bank digital currency is still in its infancy.” And in relation to that, she adds, “There are many research questions left to answer that we haven’t gotten to yet, such as the roles of intermediaries, how to promote access securely, and how to design for those who might not have smartphones or consistent internet access.”

I feel like a dinosaur reading all this tech stuff. Phew!

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