A research paper published by the Central Bank of Norway and dated November 2021 indicates that Bitcoin SV (BSV) is being considered as a viable option for the central bank to issue its Central Bank Digital Currency (CBDC) on. The research paper, published in the Norwegian language, mentions that some have considered BSV a a preferred solution for a Distributed Ledger Technology based (DLT-based) CBDC. On page 42 of the report, BSV is mentioned next to Ethereum as blockchains under consideration for use as the backbone of a CBDC, and that it has been regularly suggested as an option by technology experts.
The English translation of the report as reported by CoinGeek mentions that “Many of the actors have argued for solutions that are completely or partially based on DLT technology. Some have argued that the Norwegian Central Bank’s CBDC can be added as one program (“smart contract”) on an open blockchain such as Ethereum or Bitcoin SV, while others have recommended using private variants of the open blockchains, such as Ethereum or Bitcoin… Some players also have views on how to establish consensus mechanisms that open so that more players can participate in the validation of transactions, at the same time as Norges Bank retains control.”
It is notable to mention that since 2019 many central banks have held research on how to issue their own CBDCs, and most have realized that despite the added value of open blockchains to a global economy, the technical issuance of a CBDC on a public blockchain was often not possible. This is because of the scalability issues of these blockchains, the lack of legal oversight over transactions running on these chains, the lack of opt-in/opt-out privacy on these chains, and the highly negative environmental impact of running a ledger on a ledger led by the current consensus mechanisms.
Stephan Nilsson, CEO of Norwegian Bitcoin SV-powered company UNISOT, has informed us that we can expect the Norwegian Central Bank to make further progress regarding their research on BSV and CBDCs. He stated, “UNISOT, in partnership with nChain, has been in dialog with Norges Bank (The Norwegian Central Bank) for several years, informing them about the CBDC (Central Bank Digital Cash) capability of the Bitcoin SV blockchain. This year Norges Bank is initiating an ‘experimental testing of technical solutions’. After these initial experimental tests, one solution is to be chosen for a more thorough test, before a final decision is made about ‘if and when’ a CBDC is to be implemented in Norway. This correlates well with the timeline of both Riksbanken (Sweden Central Bank) and ECB (European Central Bank) who both have indicated 2025/2026 as a target year to implement CBDCs.”
We at Unbounded Capital are excited about the possibility of nation-backed CBDCs being issued on BSV, and we think today the BSV blockchain is the obvious choice chiefly because of scale, but also due to better built-in legal oversight, privacy, and efficiency in energy consumption.
BSV is a blockchain that, due to its unbounded block size cap, is scalable beyond not only current blockchains but can also scale beyond limits achieved by current centralized databases. It is imperative to mention that Central Banks would need CBDC solutions that are highly scalable, with fast transaction confirmations, and low transaction fees (caused by network friction).
BSV’s large block size also allows for increased amounts of transactions per block and hence reduces the environmental cost of each transaction mined within a block — hence making BSV a very “green” blockchain. If you wish to learn more about the environmental impact of BSV, please read our e-book called “Green Bitcoin”.