Ripple is a better platform for central bank digital currencies than Ethereum or Bitcoin, according to a new report from CPA Australia, a large accounting industry association.
The report, which is a fairly general overview of what CBDC’s like the forthcoming digital yuan and under-consideration digital euro and digital dollar are, said that Ripple and the XRP token that underpins it “enjoy the trust of many banks as a model for CBDCs because it is highly centralized and is based on a permissioned network where only certain network nodes can validate transactions, as opposed to decentralized and permissionless Bitcoin and Ether.”
Just last week, Ripple announced the creation of a “public, open-source XRP Ledger that provides Central Banks a secure, controlled and flexible solution for the issuance and management of digital currencies.”
Prepared for the 168,000-member association by RMIT University, “Central Bank Digital Currencies (CBDCs): A Comparative Review,” points out that the twentieth century political economy relies on central bank control of a nation’s currency that allow them to print money.
“That monopoly over money may be disappearing, and indeed may already have disappeared,” said RMIT Blockchain Innovation Hub’s co-director, Chris Berg, in a forward. “CBDCs enter this new landscape to compete with innovation in the private sector.”
The report also calls out the Facebook-founded Diem project—formerly Libra—as a potential competitor to national bank-issued currencies.
While Bitcoin and Ethereum may be the two best-known blockchains, their tokens, BTC and ether (ETH) are fully decentralized, and thus outside of any national government’s control, it said.
Noting that “France’s central bank, Banque de France, has openly discussed Ripple/XRP as a possible platform for Europe’s central digital currency,” the report continues:
“Ripple also allows the creation of new currencies and Ripple developers can decide the timing and quantity of supply in a similar way to current central bank operations.”
That said, the report also said that the “Reserve Bank of Australia has issued a statement that it is considering running a CBDC program on the Ethereum network.”
On Nov. 2, the RBA announced that it had teamed up with Commonwealth Bank, National Australia Bank, Perpetual and ConsenSys, on a pilot project exploring the possibility of creating a wholesale—that is bank-to-bank, non-retail—CBDC built on an Ethereum-based distributed ledger technology (DLT) platform.