Likely to nobody's surprise, the European Central Bank's (ECB) research on the concept of a central bank digital currency (CBDC) has now reached its next step: the official launch of a digital euro project.
In November last year, the ECB had initially launched a public survey asking citizens for their opinions and preferences with regards to a number of topics related to the issuance of a CBDC. The next step will involve a 24-month "investigation phase" which, according to a press release published on Wednesday, will be used "to address key issues regarding design and distribution."
The ECB is jumping on the bandwagon of the CBDC trend that has gripped a steadily growing number of central banks around the world. While only a few pilot projects are active today, China's central bank having been among the first to launch one, many countries have begun looking into central bank digital currencies.
In its press announcement, the ECB hints at potentially using the Eurosystem TARGET Instant Payment Settlement (TIPS) or a blockchain for the digital euro, both of which "were proven capable of processing more than 40,000 transactions per second." It is not clear which blockchain or blockchains the ECB is considering for its pursuit.
The ECB further writes that its "experiments also suggested that architectures combining centralised and decentralised elements are possible." Notably, by the definition of its key features, which would include intermediaries and strict KYC and AML requirements, it is pretty much impossible for the digital euro to become a decentralized project. A combination of centralized and decentralized features would most likely not add any notable level of decentralization to the digital coin.
In the release as well as on its official Twitter account, the ECB took to lash out against Bitcoin once more, writing that its experimental work "has also shown that the energy needs of the infrastructure would be negligible compared with the energy consumption and environmental footprint of crypto-assets, such as bitcoin."
The statement unsurprisingly drew an immediate reaction which, as of roughly two hours after the ECB published its announcement, has been largely critical.
"A digital euro is not achieving (and not even required to achieve!) the same properties of bitcoin, so of course it doesn’t need proof of work," Twitter user Thomas Rossi commented on the claims. Others criticized the central bank for its claims that weren't visibly backed by data that would warrant the statement.
To the ECB's comments that it has already identified "possible ways to protect privacy," BTCPay Server founder Nicolas Dorier responded, "'only [we] can see it' is not 'protecting privacy.'"
Meanwhile, a digital euro for EU citizens still appears to be a few years away, with the 2-year investigation period only set to start now.