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Systematization of Knowledge: The Design Space of Digital Payment Systems with Potential for CBDC

Judith Senn, Aljosha Judmayer, Nicholas Stifter, Rainer Böhme

Abstract

Central Bank Digital Currencies (CBDCs) are proposed as a public response to the uptake of privately run digital payments, with the digital euro, under development by the European Central Bank (ECB), serving as a prominent example. This momentum provides a unique opportunity to fundamentally rethink the future of money, and, assuming wide adoption, to establish payment systems that offer strong cryptographic security and privacy guarantees from the start. While the central banks in charge are investigating privacy-enhancing technologies (PETs), they often conclude that PETs are immature or insufficiently scalable. Moreover, these efforts tend to examine primitives in isolation, offering little insight into how a system using these PETs would scale. This systematisation of knowledge, therefore, provides a structured, top-down technical analysis of 36 payment system designs of complete system proposals that can inform CBDC designs or were explicitly proposed for this application. We identify recurring design patterns, technical trade-offs, and implementation challenges. Concluding, we highlight research gaps, including offline payments and post-quantum security.

Systematization of Knowledge: The Design Space of Digital Payment Systems with Potential for CBDC

Abstract

Central Bank Digital Currencies (CBDCs) are proposed as a public response to the uptake of privately run digital payments, with the digital euro, under development by the European Central Bank (ECB), serving as a prominent example. This momentum provides a unique opportunity to fundamentally rethink the future of money, and, assuming wide adoption, to establish payment systems that offer strong cryptographic security and privacy guarantees from the start. While the central banks in charge are investigating privacy-enhancing technologies (PETs), they often conclude that PETs are immature or insufficiently scalable. Moreover, these efforts tend to examine primitives in isolation, offering little insight into how a system using these PETs would scale. This systematisation of knowledge, therefore, provides a structured, top-down technical analysis of 36 payment system designs of complete system proposals that can inform CBDC designs or were explicitly proposed for this application. We identify recurring design patterns, technical trade-offs, and implementation challenges. Concluding, we highlight research gaps, including offline payments and post-quantum security.
Paper Structure (51 sections, 3 figures, 6 tables)

This paper contains 51 sections, 3 figures, 6 tables.

Table of Contents

  1. Introduction
  2. What is Money? What is a Payment?
  3. Technical Design Categories
  4. System Architecture
  5. Information
  6. Integrity of Global Information
  7. Visibility of Global Information and History
  8. Communication
  9. Network and Distributed System Model
  10. Assumptions and Trust
  11. Security Proof and Type of Evidence
  12. Trusted Setup
  13. Trusted Hardware
  14. Trust in the Operator
  15. Trust in the Issuer
  16. ...and 36 more sections

Figures (3)

  • Figure 1: Stepwise illustration of core concepts: (a) local and global information; (b) distribution of local and global information; (c) replication of global information; (d) communication networks between users, between users and operators, and inter-operator communication; (e) anonymous communication channels to ensure privacy against observers of the network traffic.
  • Figure 2: Compliance approaches for digital payment systems based on central onboarding, Sybil resistance, limits, and privacy. The dotted arrow indicates that both approaches can be combined. The dashed arrow indicates a weaker form of preventing non-compliance.
  • Figure 3: Different communication relations.