The Bank of Japan (BoJ) announced to start testing the feasibility of central bank digital currency (CBDC) from a technical perspective.
Although China has taken a lead in testing its CBDC, Japan will soon join it. As the country has announced to start its Proof of Concept process with the country’s own digital currency.
BoJ has published a report called Technical Hurdles for CBDC and explained, “BoJ would check the feasibility of CBDC from technical perspectives, collaborate with other central banks and relevant institutions, and consider introducing a CBDC”.
It has been reported earlier that the central banks of a few selected countries would come together to analyze the issuance of digital currency.
According to BoJ report, the digital currencies face two of the major technical hurdles .i.e., universal access and resilience. The bank has further mentioned that it would provide accessibility of digital currencies to everyone, even those who do not have smartphones.
Nikkei released data in the year 2018, stating that only 65 percent of Japanese citizens have smartphones.
BoJ believes that digital currency should be available and accessible to everyone in any kind of situation.
A report states that BoJ is doubtful whether it should rely on blockchain for CBDC or not. BoJ has its own centralized system for CBDC which could accumulate large capacities of digital currencies and could transact it rapidly, but if any problem occurs during this whole process then the whole system would go down.
On the other hand, the blockchain-based CBDCs can handle the single point failure easily and then show resilience. But the blockchain-based CBDCs take more time to process the transaction.
Additionally, in its announcement, the BoJ has stated that no one can deny the fact that centralized and decentralized types, both have pros and cons. But if an individual wants to process a massive transaction for retail purposes then it should opt for centralized type only.
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