Nuggets is also working with the European Commission’s Joint Research Centre to develop a privacy-preserving solution for cross-border payments.
The Bank of England is a step closer to issuing a digital pound, thanks to its partnership with Nuggets, a blockchain-based identity and payments platform. The duo will work together to design a privacy layer for the UK’s proposed retail CBDC.
Nuggets has previously worked with the Bank of International Settlements and the Bank of England on Project Rosalind. The project explored the use of self-sovereign identity (SSI) for CBDCs. Based on this work, the Bank of England asked Nuggets to investigate and design the identity and privacy layer for its proposed digital pound.
What to Expect
According to Nuggets co-founder Alastair Johnson, the feature would use anonymous connections to swap and verify credentials without revealing the user’s identity. He added that the layer is “an important step in ensuring that the CBDC is both secure and privacy-preserving”. Thus, it will use Zero-Knowledge proofs to allow users to control and keep their data private. Again, the layer will be designed to meet strict anti-fraud and anti-money laundering standards.
The Bank of England has been exploring the possibility of issuing a digital pound for several years. In 2020, it published a discussion paper on the topic. Later in 2021, it launched a public consultation on the issue. However, the financial services minister Andrew Griffith has warned against issuing a digital pound because of privacy and security issues. Nuggets’ privacy layer could be the critical component to ensure the currency is secure and privacy-preserving.
Nuggets’ Privacy Solutions: A Game Changer?
As central banks around the world pursue CBDC development, a key concern in many quarters is how to balance privacy with the need for financial transparency. Nuggets’ privacy solutions could very well be what helps to address this key challenge.
Meanwhile, Nuggets is also working on other projects to enhance privacy and security. It is working with the European Commission’s Joint Research Centre (JRC) to develop a privacy-preserving solution for cross-border payments. It has also partnered with the University of Oxford to develop a data protection solution for healthcare data. Furthermore, Nuggets is collaborating with the World Economic Forum to shape the future of digital identity and payments in the post-pandemic era.