A Privacy-Preserving Transparent Central Bank Digital Currency System Based on Consortium Blockchain and Unspent Transaction Outputs

Md Mainul Islam, Hoh Peter In

Research output: Contribution to journalArticlepeer-review

5 Citations (Scopus)

Abstract

There is rising global demand for the deployment of a central bank digital currency (CBDC) system to achieve financial stability. However, striking a balance between privacy, transparency, and auditability in such a system is technically difficult. We propose a CBDC system based on a consortium blockchain that adopts a privacy-preserving, transparent unspent transaction output (UTXO) model. The proposed system satisfies the travel rule of payment, unlike existing cryptocurrencies. Unlike the conventional UTXO approach, users use wallet-linked addresses for transactions rather than their actual wallet addresses. Each transacting address is generated using two keys: a random private key computed by the sender and the recipient's public key. The final private key is known only to the recipient, and it is required to spend the UTXO received using the address. Thus, each user holds only a single authorized public key and address, which eases regulatory compliance in the network without compromising anonymity and privacy. To manage the blockchain, the central bank and several certificate authorities execute the energy-efficient Clique consensus algorithm. Only the central bank supplies money to the network. A prototype of the system was implemented using Python-Flask, and it outperformed the state-of-the-art systems by providing a smaller transaction size (665 B) and lower verification time (9 ms).

Original languageEnglish
Pages (from-to)2372-2386
Number of pages15
JournalIEEE Transactions on Services Computing
Volume16
Issue number4
DOIs
Publication statusPublished - 2023 Jul 1

Bibliographical note

Publisher Copyright:
© 2008-2012 IEEE.

Keywords

  • Central bank digital currency
  • Clique consensus algorithm
  • consortium blockchain
  • elliptic curve cryptography
  • unspent transaction output

ASJC Scopus subject areas

  • Hardware and Architecture
  • Computer Science Applications
  • Computer Networks and Communications
  • Information Systems and Management

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