A Scalable Architecture for Electronic Payments

TL;DR

This paper proposes a scalable, privacy-preserving electronic payment architecture using digital currency and digital assets, integrating regulatory oversight with consumer control without central authority reliance.

Contribution

It introduces a novel digital asset design enabling unforgeable, stateful, and oblivious assets that work within existing banking systems and enhance privacy and control.

Findings

Supports scalable electronic payments with privacy features

Compatible with existing banking and regulatory frameworks

Achieves consumer control through non-custodial wallets

Abstract

We present a scalable architecture for electronic retail payments via central bank digital currency and offer a solution to the perceived conflict between robust regulatory oversight and consumer affordances such as privacy and control. Our architecture combines existing work in payment systems and digital currency with a new approach to digital asset design for managing unforgeable, stateful, and oblivious assets without relying on either a central authority or a monolithic consensus system. Regulated financial institutions have a role in every transaction, and the consumer affordances are achieved through the use of non-custodial wallets that unlink the sender from the recipient in the transaction channel. This approach is fully compatible with the existing two-tiered banking system and can complement and extend the roles of existing money services businesses and asset custodians.