The Bank of Korea (BOK) said it has completed a research paper of a 10-month CBDC simulation experiment on the 10-month central bank digital currency (CBDC).

According to Yonhap News Agency, the Bank of Korea (BOK) started a research work of a two-stage CBDC simulation experiment for 10 months from August 2021. This digital earnings experiment conducts various experiments supporting payment policies and services, such as central bank digital currency (CBDC) interest payment and redemption, freezing and collection, and cross-country remittances.

The report also tested its CBDC for buying non-fungible tokens (NFTs).

As a first stage, BOK created a CBDC simulation environment based on cloud distributed ledger technology from August to December last year, tested basic functions such as CBDC manufacturing, issuance, distribution and redemption, and completed the first stage experiment in January of this year.

The Bank of Korea completed the second phase of its retail central bank digital currency (CBDC) simulation in late June and shared the results of the experiment on Oct. 7.

The central bank highlighted the performance issues of blockchain technology. The Bank of Korea found the overall performance of the Ethereum-based blockchain to be insufficient, including proven scaling solutions and privacy technologies.

Experimental data shows that a CBDC can process up to 2,000 transactions per second; however, the Bank of Korea said there are some limitations to processing real-time transactions during peak hours. One of the tests simulated peak demand by maintaining 4,200 transactions per second (TPS) for 30 minutes. At this level of activity, users sometimes have to wait up to a minute of delay.

Chang Yong Rhee, governor of the central bank, said it might be better to use a standard centralized accounting database.

In addition to testing the possibility of extended CBDC functions such as offline transactions, digital asset transactions, and policy support tasks, it also tested the application of new technologies such as “zero knowledge proof technology” (ZKP) and distributed ledger expansion technology to strengthen the possibility of personal information protection.

The Bank of Korea announced that even after the research project is completed, it will carry out additional experiments in collaboration with 4 banks and 15 institutions, including the Korea Financial Clearing and Telecommunications Institute, to more closely examine the functionality of the already established CBDC simulation system. and performance

At last count, 109 countries advocate for a CBDC. 11 countries have implemented digital currencies across the board. The United Arab Emirates is one of 14 countries where CBDCs have entered the pilot phase and are ready for launch.

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