Sovereign digital currency system with decentralized infrastructure

Abstract

In this paper, we consider the concept of a 1-tier national monetary system based on a digital sovereign currency issued by a central bank. In contrast to the approach, based on a centralized technical infrastructure, used in most, if not all, CBDC projects, we suggest to use a decentralized infrastructure. Such an infrastructure can be thought of as a peer-to-peer network consisting of nodes, which are equipotent participants and are equally privileged, each providing a complete set of services required to maintain digital wallets and process transactions with digital currency. Also, unlike most of CBDC projects, two possible formats of digital titles of property are considered: digital accounts with continuously modifiable amount and token-like digital coins with a fixed non-modifiable amount. The suggested model of currency system involves built-in payment mechanisms enabling one to carry out, both online and offline, transfers of digital currency with immediate finality and irrevocability. In this paper, we present an overview of the suggested model of currency system.