The CBDC ledger may be on either a private or a public network. Digital currencies can use either, or a combination of the two, as detailed in our ‘The Technology behind CBDCs’ blog.
Private networks
Private networks, where data is only accessible by a controlled audience, are often associated with more anonymity, privacy, and control over personal data. But as recent news reports on the handling of private customer data have shown, and as modern systems must increasingly interoperate with the structures of the internet, privacy has steadily been eroded.
Examples of closed networks include cloud computing and private servers.
Public networks
Public networks involve the wide distribution or public announcement of transactions and data, such that any entry of data, intended or not, is recorded on an open ledger and can no longer be deleted in any feasible manner. A common misunderstanding is that public networks are inherently risky because they broadcast data openly, but the opposite is true.
Eliminating the ability to easily remove critical data, including transaction data, is precisely what makes it secure and immutable. Public networks include blockchain. While transactions are publicly broadcast, privacy can be protected by only allowing authorised parties to access sensitive information.
At nChain, we are working with central banks to research and design a truly more resilient, trusted and inclusive modern economy, securing the livelihoods and prosperity of citizens for generations to come.
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