On October 12, the credit card company Mastercard announced the successful completion of a trial involving wrapping Central Bank Digital Currencies (CBDCs) on different blockchains. The new solution enables CBDCs to interoperate across multiple blockchains with increased ease and security.
The trial was executed as a part of the CBDC pilot project by the Reserve Bank of Australia (RBA) and the Digital Finance Cooperative Research Centre (DFCRC) to explore the potential use cases of CBDC in Australia. The solution was developed in partnership with Australian financial services firm Cuscal and fintech company Mintable.
During a live demonstration, Mastercard showcased how their solution could allow a holder of a pilot CBDC to buy an NFT listed on the Ethereum public blockchain. The process involved “locking” the needed amount of pilot CBDC on the RBA’s pilot CBDC platform and creating an equivalent amount of wrapped pilot CBDC tokens on Ethereum.
A prerequisite of the test transaction was that the Ethereum wallets of both the buyer and seller and the NFT marketplace smart contract had to be ‘allow-listed’ on the platform.
With all other transfers of the wrapped pilot CBDC blocked, the platform’s ability to implement controls even on public blockchains was successfully demonstrated.
Zack Burcks, the CEO and founder of Mintable, recognized the significance of this trial. He said, “The vast potential of NFTs was obvious during this progressive CBDC pilot. Together with Mastercard, we have identified a use case whereby digital currencies and NFTs can easily be linked, potentially stamping out fraud and theft, ending the loss of documentation and records, and unleashing new possibilities for commerce.”
Richard Wormald, division president, Australasia at Mastercard, commented, “This technology not only has the potential to drive more consumer choice, but it also unlocks new opportunities for collaboration between the public and private networks to drive genuine impact in the digital currency space.”
A crucial part of this venture’s success was Mastercard’s Multi Token Network, introduced in June 2023. The Multi-Token Network, currently in beta, integrates payment technology with blockchains to enhance blockchain-based payments.
The RBA has shown interest in exploring the potential of the Australian dollar CBDC. They believe CBDC can facilitate complex payment arrangements and foster financial innovation, which fiat currencies cannot replicate. The success of the Mastercards CBDC trial underlines the growing synergy between traditional financial institutions and the world of blockchain and crypto.
The writer is the founder at yMedia. He ventured into crypto in 2013 and is an ETH maximalist. Twitter: @bhardwajshash