CBDC and Blockchain, The Future of Central Bank Digital Currencies

berbagiberkat.com – Central Bank Digital Currency (CBDC) represents a digital form of a country’s fiat currency, issued and backed by the central bank. Unlike decentralized cryptocurrencies like Bitcoin, CBDCs are centralized and fully controlled by monetary authorities. By 2025, over 130 countries are exploring or piloting CBDCs, with blockchain technology emerging as a key enabler for many projects. Blockchain offers transparency, security, immutability, and efficiency—qualities that align with the goals of modernizing payment systems while maintaining financial stability. This article explores the intersection of CBDC and blockchain, current developments, benefits, challenges, and the global landscape.

What Is a CBDC and Why Blockchain?

A CBDC is essentially “digital cash”—a liability of the central bank available to the public (retail CBDC) or financial institutions (wholesale CBDC). There are two main architectures:

• Account-based: Users hold accounts directly with the central bank or intermediaries.
• Token-based: Digital tokens on a distributed ledger, often using blockchain.

Blockchain-based CBDCs leverage distributed ledger technology (DLT) for:

• Permissioned blockchains: Private networks controlled by the central bank and trusted nodes (e.g., banks).
• Smart contracts: Automate payments, compliance, and programmable money features.

Projects like China’s digital yuan (e-CNY) initially used hybrid models, but many newer pilots favor blockchain for interoperability and cross-border efficiency.

Key Benefits of Blockchain in CBDCs

1. Enhanced Security and Resilience Immutable records reduce fraud and cyber risks; distributed nodes prevent single-point failures.
2. Transparency and Auditability Regulators can track transactions in real-time while preserving privacy through zero-knowledge proofs or encrypted ledgers.
3. Financial Inclusion Blockchain enables low-cost transfers, even in remote areas via mobile wallets.
4. Cross-Border Payments Projects like mBridge (BIS innovation hub with China, UAE, Thailand, Hong Kong) use blockchain for instant, cheap international settlements.
5. Programmable Money Smart contracts allow conditional payments (e.g., welfare funds usable only for food).
6. Reduced Intermediary Costs Wholesale CBDCs on blockchain streamline interbank settlements.

Global CBDC Blockchain Projects in 2025

• China’s e-CNY: World’s largest pilot (hundreds of millions of users), using a hybrid blockchain for privacy and control.
• Bahamas Sand Dollar: First fully launched retail CBDC (2020), blockchain-based for island-wide inclusion.
• Sweden’s e-Krona: Riksbank testing Corda-based blockchain for retail payments.
• European Digital Euro: ECB pilot (2023-2026) exploring permissioned blockchain for privacy-preserving transactions.
• Project mBridge: Multi-CBDC platform using custom blockchain for cross-border trade (China, UAE, Thailand, Hong Kong).
• India’s e-Rupee: RBI wholesale and retail pilots incorporating blockchain elements.

Over 100 central banks are researching, with 11 live CBDCs as of early 2025 (mostly Caribbean and African nations).

Challenges and Concerns

1. Privacy vs. Control Central banks want traceability to prevent money laundering, but citizens fear surveillance.
2. Scalability Public blockchains struggle with high transaction volumes; permissioned solutions are preferred.
3. Cybersecurity Risks Hacks on bridges or smart contracts could undermine trust.
4. Disintermediation of Banks Retail CBDCs might pull deposits from commercial banks.
5. Interoperability Different CBDC blockchains need standards for cross-border use.
6. Energy Consumption Though permissioned blockchains are efficient, environmental concerns persist.

The Future of CBDC on Blockchain

By 2030, analysts predict 20-30 countries will launch full retail CBDCs, many blockchain-enabled. Trends include:

• Hybrid models (blockchain + traditional databases).
• Privacy-enhancing technologies (zero-knowledge proofs).
• Multi-CBDC platforms for global trade.

CBDCs on blockchain represent a bridge between traditional finance and decentralized innovation—offering the stability of fiat with the efficiency of crypto. While challenges remain, the momentum is clear: central banks are embracing blockchain to modernize money in the digital age. Whether for faster payments, inclusion, or sovereignty, CBDCs could reshape the global financial system in the coming decade.