COTI Confirmed as First Blockchain Project to Develop Bank of Israel’s Digital Shekel Challenge

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As a seasoned researcher with a deep understanding of blockchain technology and its potential applications in finance, I am particularly excited about COTI being invited to participate in the Digital Shekel Challenge by the Bank of Israel. Given my extensive knowledge of the challenges and complexities involved in developing Central Bank Digital Currencies (CBDCs), I firmly believe that COTI’s Layer 2 privacy blockchain is uniquely positioned to address one of the most significant hurdles – maintaining confidentiality while ensuring transparency.

Expert: COTI, a privacy-focused blockchain platform at the Layer 2 level, has received an invitation from the Bank of Israel to collaborate on the Digital Shekel Challenge. This project aims to investigate the creation of a digital national currency. Notably, COTI is the sole blockchain chosen for this endeavor.

COTI’s second layer (L2) is specifically engineered to facilitate financial transactions, such as payments, while keeping sensitive financial information concealed. By doing so, it addresses a significant hurdle in the adoption of Central Bank Digital Currencies (CBDCs), leveraging advanced technology and expertise.

Digital Shekel Challenge Gets the Green Light

Fourteen teams have been brought on to the Digital Shekel Challenge and given the responsibility of tackling the complex issues associated with this groundbreaking project. Teams with expertise in fintech, privacy, and networking will collaborate on creating potential applications and determining the most effective method for implementing a digital shekel.

Due to the extensive scope of this project, it necessitates addressing various aspects including user onboarding and e-wallet formation, as well as managing payments. It is essential to strike a balance between transparency and privacy throughout. Kickstarting in August, the Digital Shekel Challenge will unfold progressively over several weeks. Towards the end of October, eligible projects will be given an opportunity to showcase their proposed applications to the Bank of Israel.

Building a CBDC Solution With Blockchain Tech

Blockchain technology has been widely recognized as an effective solution for central bank digital currencies (CBDCs) due to its capability to ensure an unchangeable ledger of wallet balances and robust security features. However, the current public blockchains are not ideal for this application because of the need for scalability and privacy. Consequently, launching a CBDC on blockchain necessitates building a custom-designed chain.

Although the specific form of Israel’s digital shekel is still undecided and it remains uncertain if this project will advance beyond a trial phase, COTI is committed to showcasing how its blockchain technology can effectively address the related challenges.

In a recent announcement, COTI CEO Shahaf Bar-Geffen expressed his pride in being the sole blockchain representative chosen for the Digital Shekel Challenge. He emphasized the significance of strong privacy protection for Central Bank Digital Currencies (CBDCs) to reach their full potential. By utilizing the confidentiality features offered by COTI’s garbled circuits technology, Shahaf is confident that his team can develop a solution capable of bringing the idea of a digital shekel into practical application.

The advantage of COTI’s garbled circuits technology is its remarkable speed, which outperforms alternatives like Zero-Knowledge proofs. Consequently, it can comfortably handle millions of transactions without being hindered by issues related to throughput or excessive computational expenses.

Several businesses, such as PayPal Israel, Team Energy, and Open Finance, have been given the opportunity to join the Digital Shekel Challenge. This initiative was motivated by Project Rosalind, spearheaded by the BIS Innovation Hub, and is expected to generate significant interest from central banks around the world that are considering the development of their own Central Bank Digital Currencies (CBDCs).

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2024-07-24 13:26