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Australian Central Bank to use ETH blockchain for CBDC project

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  • The Australian CBDC is called eAUD.
  • The eAUD platform will be released on the Ethereum forked chain, and the CBDC pilot project is expected to be completed in mid-2023.

Australia has published a white paper outlining fresh details of its central bank digital currency (CBDC), as the race to launch digital currencies heats up around the world.

The document, released on Monday, comes after the Reserve Bank of Australia (RBA) partnered with the Digital Finance Cooperative Research Center (DFCRC) in August to conduct research and pilot the project. According to the magazine, the purpose of the CBDC pilot program is to explore innovative use cases and business models that could be supported by the issuance of CBDC.

The paper reads:

The purpose of the project is to test a general-purpose CBDC issued under the responsibility of the RBA for use in actual pilot implementations of services provided by Australian industry players.

The program, which is expected to be completed in mid-2023, will also allow various stakeholders to better understand some of the technical, legal and regulatory aspects related to CBDC. As the paper notes, the pilot CBDC is called eAUD and will be minted, issued, redeemed and burned by the RBA. On the other hand, the DFCRC is responsible for the implementation of the CBDC pilot program, which includes the development and installation of the eAUD platform.

CBDC will be launched on a side branch of Ethereum

The pilot CBDC platform runs on Quorum, an enterprise-focused fork of the Ethereum blockchain. According to the document, blockchain “was chosen as a widely used and well-understood platform that would facilitate the participation of many parties in the project.” The brainchild of JP Morgan, Quorum was developed to satisfy certain needs that other blockchains lacked, especially in the financial sector.

Quorum utilizes a “permission control” consensus that helps a designated authority, such as the RBA, pre-authorize the execution of tasks for only selected participants. It also allows the community to manage and share digital assets directly, eliminating the need for a third party. Additionally, blockchain eliminates transaction costs and is said to facilitate transactions faster than Bitcoin and Ethereum.

According to the White Paper, “The eAUD platform has transaction throughput limitations (with a delay of 2-5 seconds), which are not expected to affect the operation of the use cases selected for the pilot project.”

In particular, the eAUD platform acts as a centralized platform for the management and supervision of the RBA. Eligible participants can access the platform through defined application programming interfaces (APIs) and ERC-20 smart contract interfaces.

While the Australian government has been criticized for its inaction on crypto, it has recently started to aggressively push for crypto regulation and the launch of a CBDC to catch up. Recently, the Australian Department of Finance launched a “token mapping” exercise to plug regulatory gaps and pave the way for cryptocurrencies and other digital assets.

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