A new study from the Bank of England shows that privacy technologies like zero-knowledgeproofs can enhance users’ control of data when using a digital currency.
It is important to note that the word “you” means “you”. Bank of England has suggested that zero-knowledge proofs and other privacy-enhancing technologies — also known as PTEs — could be viable components of a potential digital pound.
Its latest report You can call them “Enhancing the Privacy of a Digital Pound,” The central bank has said that technologies such as pseudonymizations, ZK proofs and secure multiparty computations are among the most important. “might feasibly be applied to digital currency systems such as the digital pound to minimize the sharing of data both with the central bank and between payment intermediaries, giving users greater control over their data and enhancing user privacy.”
“This presents opportunities for a digital pound to be at least as private as current forms of digital money and potentially even more private, although as with any technology, there are limitations to what emerging types of PETs can achieve.”
The Bank of England
After receiving public feedback on its consultation for 2023, the Bank of England, HM Treasury, and the Department of Finance reaffirmed that they were committed to protecting the privacy of users, reiterating their assurances that the government or central bank will not have access to personal information.
ZK proof is a protocol which allows one party to demonstrate that they are aware of something, without having to reveal the real information. This technology is being actively used by blockchains, such as Ethereum.ETHZcashZECPolygon (POLFor privacy and scaling solution.
While collaborating with Massachusetts Institute of Technology’s Digital Currency Initiative to explore the potential of PETs in the future, the British Central Bank has acknowledged that they have limitations, and must balance privacy concerns with compliance with regulations.
“Tensions may also emerge between regulations that require the disclosure of data and the latitude to deploy PETs,” The report emphasized the need for more research in order to tackle these issues.
In 2020, the Bank of England started exploring a digital currency when it created a taskforce to assess its potential. Public consultations and comprehensive assessments are ongoing, but have only been done since the beginning of 2021. The central bank has stressed the need to adapt to the technological advancements in payment and the decline of cash. It hasn’t made a final choice on the launch of its digital currency.
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Source: crypto.news
