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

TL;DR

This paper systematically analyzes 36 digital payment system designs to identify recurring patterns, trade-offs, and challenges, informing CBDC development with a focus on security, privacy, and scalability.

Contribution

It provides a comprehensive top-down analysis of existing payment system proposals, highlighting design patterns, trade-offs, and research gaps relevant to CBDC implementation.

Findings

Identified common design patterns in digital payment systems.

Highlighted key trade-offs between privacy, security, and scalability.

Pointed out research gaps such as offline payments and post-quantum security.

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.