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Federal Reserve Bank of Boston and MIT researchers investigating the technicalities of a CBDC have designed a system capable of handling 1.7 million transactions a second, without using distributed ledger technology.
The partners have published research describing a theoretical high-performance and resilient transaction processor for a CBDC that was developed using open-source research software.
The researchers investigated two possible code bases, both of which exceeded speed and throughput requirements.
The first, DLT-based, architecture processed transactions through an ordering server which organises fully validated transactions into batches, or blocks, and materialises an ordered transaction history. It completed over 99% of transactions in under two seconds but the ordering server resulted in a bottleneck which led to peak throughput of approximately 170,000 transactions per second.
In contrast, the second architecture processed transactions in parallel on multiple computers without relying on a single ordering server to prevent double spends. This resulted in superior scalability, with throughput of 1.7 million transactions per second with 99% of transactions completing in under a second.
Say the researchers: “Despite using ideas from blockchain technology, we found that a distributed ledger operating under the jurisdiction of different actors was not needed to achieve our goals.
“Specifically, a distributed ledger does not match the trust assumptions in Project Hamilton’s approach, which assumes that the platform would be administered by a central actor. We found that even when run under the control of a single actor, a distributed ledger architecture has downsides.
“For example, it creates performance bottlenecks, and requires the central transaction processor to maintain transaction history, which one of our designs does not, resulting in significantly improved transaction throughput scalability properties.”
Last month, the Federal Reserve published its long-anticipated discussion paper on the risks and benefits of a digital dollar and invited public comment – but has studiously avoided giving any hints on its plans.
While it inches ahead with policy questions, the Boston Fed and MIT researchers will continue their technical work, moving onto phase two exploring new functionality and alternative technical designs.
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