The release of the open source code for the nation’s central bank digital currency (CBDC) sandbox marks a significant achievement for Norway’s central bank in its efforts to promote the use of digital currencies.
According to Norway’s Central Bank, the digital Norwegian Krone is currently being tested as an ERC20 token on Ethereum.
The CBDC has been working on Ethereum for a while now. In May of 2022, Norge’s Bank announced the testing of the creation of a digital central bank currency.
“The first work stream is to develop a prototype infrastructure based on Ethereum technology, i.e. the technology used in the Ethereum cryptocurrency system.” Norges Bank wrote in its report. “The purpose of this workstream is to establish a prototype for a core infrastructure for the issuance, distribution, and destruction of DSPs that banks and other players can connect to for experimental testing.”
The Norwegian Central Bank releases open source code for its CBDC
A note sent by Nahmii, a company hired by Norway’s Central Bank, highlighted that the code for the Norwegian CBDC’s prototype is freely available on GitHub.
While some people speculate that Central Banks may invest in Bitcoin in the future, Ethereum is also on their radar. Although not considered a value reserve, it can act as the foundation for central bank central digital currency (CBDC) payments.
Created on Ethereum, its front end was “designed to provide an intuitive and clear user experience.” Along with that, it also has mining and extraction processes, as well as stablecoins.
Does Ethereum support CBDCs on its network?
Given its relatively high fees, it’s hard to imagine that Ethereum’s network could serve as a base for CBDCs. The amount to be spent with every transaction would make it not worth it for most citizens.
However, the arrival of The Merge, scheduled for the upcoming Friday (15), opens doors for more protocol developments.
In particular, its developers believe that the network would be able to scale to support 100.000 transactions per second using the sharding technology, which is expected to be available in 2023.