Robert Bench, who is the Federal Reserve Bank of Boston’s director of applied research, thinks privacy should be a focus during the creation of digital money.
Bench stated during a Chamber of Digital Commerce panel on Friday:
“Privacy is a question that we have learned is critical from a technical perspective.” He added:
“One of our learnings is that the questions of privacy and identity must be considered at the earliest stage of the architecture. Making privacy or identity an ad hoc process is suboptimal from both a privacy or identity perspective, and most importantly from a security perspective.”
A largely digital world means less privacy and money is no exception. While countries look toward central bank digital currencies (CBDCs), payments are less private than the cash transactions of yesterday. CBDCs may or may not give users privacy, however.
“It’s something that policy makers are going to need to think about early,” Bench mentioned of privacy. “When you add it on later, it doesn’t work as well.”
Tether (USDT) co-founder Craig Sellars said:
“We should shift our questioning to this: If we have the technology to preserve those exact features of paper dollars, why should we accept digital dollars with any fewer freedoms? I argue that we shouldn’t and we mustn’t.”
Sellars said the U.S. has “an open field” ahead in terms of building a private and cash-like CBDC.
On the other hand, the U.S. Internal Revenue Service recently hired two crypto analytics firms to break the privacy technology behind the anonymity-focused Monero (XMR) asset.