Objectives and Design Principles in Offline Payments with Central Bank Digital Currency (CBDC)
David-Alexandre Guiraud, Andrea Tundis, Marc Winstel
TL;DR
The paper analyzes design principles for retail CBDCs with offline payments, identifying three core objectives—Access Control Security, Security against Depositor's Misbehavior, and Privacy by Design. It argues for a concrete alignment of objectives with countermeasures, notably using secure hardware to enforce wallet integrity and employing zero-knowledge proofs and blind signatures to achieve privacy without eroding security. The authors examine existing offline CBDC proposals through this framework, elucidating trade-offs between privacy, traceability, and hardware trust. They highlight that preventing double-spending entirely offline is infeasible without secure hardware, while privacy requires cryptographic techniques, and they call for modular, auditable designs and further work on performance and hardware trust chains.
Abstract
In this work, fundamental design principles for a central bank digital currency (CBDC) with an offline functionality and corresponding counter measures are discussed. We identify three major objectives for any such CBDC proposal:(i) Access Control Security - protection of a user's funds against unauthorized access by other users; (ii) Security against Depositor's Misbehavior - preservation of the integrity of an environment (potentially the wallet) against misbehavior of its owner (for example, double-spending), and (iii) Privacy by Design - ensuring privacy is embedded into the system architecture. Our central conclusion is the alignment of the objectives to concrete design elements as countermeasures, whereas certain objectives and countermeasures have no or minimal interferences with each other. For example, we work out that the integrity of a user's wallet and, accordingly, the prevention of double-spending race attacks should be addressed through the adoption and integration of \textit{secure hardware} within a CBDC system.