In a note published by Nahmii last Thursday (8), the company highlights that the code for the Norwegian CBDC prototype is available to everyone on GitHub. According to the Central Bank itself, the digital Norwegian krone is being tested on Ethereum as an ERC20 token, the most used standard by the industry. Although it seems new, BC Norway has been eyeing Ethereum for months. In a post from May of this year, he points out that he “chose to use technology based on open source” for his tests. As a highlight, he cites the technology of Ethereum and the reasons why several stablecoins opted for this network, noting the growing development of complementary programs, such as wallets, around this ecosystem.
Norway’s Central Bank releases its CBDC open source on Ethereum
While some people point out that Central Banks may invest in Bitcoin in the future, Ethereum is also in their sights. While not treated as a store of value, it can serve as the basis for central bank digital currencies, CBDCs. Last Friday (8), Nahmii, a company contracted by the Central Bank of Norway, made the digital Norwegian krone test code available to everyone on GitHub. Built on Ethereum, its frontend is “designed to offer an intuitive and clear interface”. In addition, it also has minting and burning processes, as well as stablecoins that today are the biggest success story within this ecosystem.
“As part of our experimental CBDC trials, Nahmii developed a prototype infrastructure based on Ethereum technology,” writes the Central Bank of Norway “Some actors are already involved in the auditions, but we hope more will participate! You can find the open source code on Github.”
Du kan lese mer om eksperimentell testing av digitale sentralbankpenger i dette blogginnlegget på Bankplassen blogg: https://t.co/VuPWyBdehZ — Norges Bank (@NorgesBank) September 9, 2022
Would Ethereum withstand CBDCs on its network?
At the moment, it is difficult to imagine that Ethereum could serve as a basis for any CBDC. After all, high transaction fees would be the biggest obstacle for citizens to have a good experience with a state digital currency on this blockchain. However, the arrival of The Merge, scheduled for next Thursday (15), opens the way for further protocol developments. Notably, its developers believe they will be able to scale the network to support 100,000 transactions per second with sharding technology, scheduled for 2023. Also, tokens on their network can be built to give their creators great power, unlike ETH. As an example, currencies can be created or destroyed, as well as balances can be frozen, which is all a Central Bank needs to know. Finally, Ethereum could solve the problem of interoperability between CBDCs if it becomes a standard between BCs. As a consequence, ether (ETH) could appreciate immensely as each user would need to have a small fraction to cover transaction fees, even if these are reduced to almost zero.
