Either way, using a blockchain network won’t suffice, says Grey, because many of the same people who rely on cash also lack internet access. He envisions cards that could be tapped together or to smartphones to transfer value anonymously, online or offline. Like physical dollars, the digital stand-ins would be so-called bearer instruments, meaning that possession gives the holder rights to ownership. There are a number of unanswered technical questions about how to pull all this off securely, however—a fact that Grey acknowledges.

Unanswered technical questions were also the motivation behind Project Hamilton. The researchers set out to investigate possible designs for a “resilient transaction processor” that could handle at minimum tens of thousands of transactions per second, the capacity they determined necessary to handle the volume of retail transactions in the US. But they also sought to develop a transaction processor that was flexible enough in its design to leave open a range of options for other parts of the system, like technologies for privacy and offline payments. 

The software they came up with does not use a blockchain, but it borrows components from Bitcoin. Neha Narula, director of the Digital Currency Initiative at the MIT Media Lab, says it’s possible to break a blockchain system down into its component parts and then apply some but not all of those pieces in a different context. 

For example, one piece is a blockchain’s decentralized nature, which makes it possible to run a cryptocurrency system without relying on any one person to control it. The team decided that a CBDC would not need this property, since it would be run by a central bank. Another property of blockchains is known as Byzantine fault tolerance (BFT), which allows the network to keep functioning even if malicious participants are acting dishonestly. The Hamilton team decided they could assume that since the system would be run by a single central bank, there wouldn’t be malicious participants, and so BFT wouldn’t be required. 

Ditching BFT and decentralized governance has its benefits. In Bitcoin, maintaining them both makes the system expensive and slow to run, in part because data must be replicated on every computer on the network. The result is that Bitcoin can only process around seven transactions per second. In early 2022, the Hamilton team demonstrated a system capable of processing 1.7 million transactions per second—much faster than even the Visa network, which Visa claims is able to process 65,000 transactions per second. 

Like Bitcoin, Hamilton’s transaction processor used cryptographic signatures to authorize payments. It also used Bitcoin’s method for recording transactions, called the unspent transaction outputs (UTXO) model, which stops people from spending the same coin twice. The details of the UTXO model are complicated, but it works because each transaction references the specific coins being spent.