The Central Bank of Estonia concluded after a recent experiment that the blockchain-based digital euro is highly scalable and can handle an almost unlimited number of payments. The central banks of several eurozone countries and the European Central Bank participated in the test, which also claimed that the carbon footprint of digital currency will be smaller than that of card payments.
Process 300,000 payments per second during the digital euro trial period
Experiments conducted as part of the most recent roll out The “investigation phase” of the digital euro project has determined that the blockchain-based solution of the European Common Currency electronic version can theoretically support an “almost unlimited” number of simultaneous payments. The test also showed that the technology will strike a “good balance” between maintaining privacy and meeting anti-money laundering requirements.
In an announcement published on its website, the Central Bank of Estonia praised the test results. Bank of Estonia Participated in this experiment with colleagues from seven other member states of the Eurozone—Spain, Germany, Italy, Greece, Ireland, Latvia, and the Netherlands—and the European Central Bank (ECB). In mid-July, the European Central Bank Management Committee gave the green light to further prepare the digital euro, but has not yet made a final decision on its introduction.
The purpose of this experiment is to evaluate possible technical solutions for the central bank’s digital currency (Central Business District). Eesti Pank explained in detail that during the experiment, people with digital identities from Estonia, Latvia, Lithuania and Spain made payments in digital currency. The tested digital euro system can process more than 300,000 payment transactions per second at the same time, and the funds reach the recipient in less than two seconds. The Estonian regulator added that the estimated carbon footprint of the network is smaller than the current card payment system.
The European digital currency system has no restrictions on money supply
According to Eesti Pank, experts have been able to overcome some of the previously identified bottlenecks. Experiments have shown that due to the high scalability of the blockchain technology used, it is easy to increase the number of payments using digital euros if necessary. The central bank also pointed out that the “innovative” technology did not impose “any basic restrictions” on the scale of the money supply, and elaborated on:
The system can handle the entire supply of euros in circulation and more, and there is no limit to the number of currency holders or the number of simultaneous payments.
Further trials will be conducted as part of the investigation phase of the project, and Eesti Pank plans to continue to participate. The European Central Bank hopes to bring in more banks and payment service providers, and intends to conduct various user surveys to comprehensively review options for issuing digital euros. At this stage, which is expected to last about 24 months, the financial authorities will also work hard to determine the technical infrastructure required for digital currencies in the Eurozone.
What is your opinion on the digital euro test results announced by Eesti Pank? Share your thoughts on the CBDC project in the comments section below.
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