BREAKING For Ethereum: Australian Central Bank to use ETH blockchain for CBDC project

  • Australia’s CBDC will be called eAUD.
  • eAUD platform will launch on an Ethereum forked blockchain and the Pilot project on the CBDC is expected to be complete around mid-2023.

Australia has released a Whitepaper outlining fresh details of its Central Bank Digital Currency (CBDC) as the race towards launching digital currencies around the globe intensifies.

The document, which was made public on Monday, comes after the Reserve Bank of Australia (RBA) partnered with the Digital Finance Cooperative Research Centre (DFCRC) in August to conduct research and steer the project’s pilot program.  According to the paper, the purpose of the CBDC pilot program is to explore innovative use cases and business models that could be supported by the issuance of a CBDC.

The paper reads:

The project intends to test a general-purpose pilot CBDC issued as a liability of the RBA for use in real-world, pilot implementations of services offered by Australian industry participants.

The program, which is expected to complete in mid-2023 will also enable various stakeholders to better understand some of the technological, legal, and regulatory considerations associated with a CBDC.  As stated in the paper the pilot CBDC will be called eAUD and will be minted, issued, redeemed, and burnt by the RBA. On the other hand, the DFCRC will be responsible for implementing the CBDC pilot program which entails the development and installation of the eAUD platform.

CBDC to be launched on Ethereum’s offshoot

The pilot CBDC platform will run on “Quorum” an “Enterprise-focused” fork of the Ethereum blockchain. According to the document, the blockchain “was chosen as a widely used and well-understood platform that would facilitate participation in the project by a wide range of entities.” As a brainchild of JP Morgan, Quorum was developed to satisfy certain needs that were lacking from other blockchains, especially for the financial industry.

Quorum utilizes a “permission management” consensus which helps a designated authority such as the RBA to pre-approve the implementation of tasks only to a select set of participants. It also allows an entity to manage and distribute digital assets directly, eliminating the need for a third party. Further, the blockchain eliminates transactional costs and is said to facilitate transactions at a faster rate than Bitcoin and Ethereum.

As per the whitepaper, “The eAUD platform will have transaction throughput limits (with 2-5 second latency) that are not expected to impact the operation of use cases selected for the pilot project.”

Notably, the eAUD platform will operate as a centralized platform, under the management and oversight of the RBA. Approved participants will be able to access the platform through specified Application Programming Interfaces (APIs) and ERC-20 smart contract interface functions.

Meanwhile, despite the Australian government being criticized for inaction when it comes to crypto, it has recently begun to aggressively push for crypto regulation and the launch of a CBDC to avoid falling behind. Recently, Australia’s treasury launched a “token mapping” exercise aimed at plugging gaps in regulations to pave way for cryptocurrencies and other digital assets.