God V: central bank digital currencies can interact with cryptocurrencies

Ethereum co-founder Vitalik Buterin has proposed a method for trading central bank digital currencies using cryptocurrencies.

Buterin raised a question on Twitter, is it possible for the central bank's digital currency transactions to be proved by crypto? In other words, is it possible to use mathematical methods to prove the completed transaction of the central bank's digital currency. If possible, this opens up some interesting possibilities.

He said, "If I send you N central bank digital currencies, can I generate a cryptographic certificate that can be verified on Ethereum? Basically, if I can prove to the Ethereum blockchain that the central bank digital currency system works Transactions, you can use it to build automated smart contract DEXs. "

Buterin explained that the process "will make it easier for people to trade between fiat and cryptocurrencies."

He mentioned the operation as follows. Suppose two people agree to pay each other, but use different payment methods. One wants to use some Ethereum to trade central bank digital currencies, such as China's upcoming digital renminbi. The question is, how do they ensure that the other party is willing to pay? They can create a smart contract and design it so that when one party completes a transaction, the other party will automatically execute it.

To achieve this, the Ethereum blockchain needs to be able to know whether the central bank's digital currency has been transferred, as it operates on a completely different centralized system. So as Buterin said, if cryptographic verification of central bank digital currency transactions can be done, this approach will work.

Image source: Pixabay

By Liang CHE

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