Self-Sovereign Centralised ID – the Key to CBDCs?

A recent article in Forbes makes the case for Self-Sovereign Decentralised Identity to be used to address privacy issues with CBDCs ¹.

A CBDC involves a ledger, whether held on distributed ledgers or otherwise, where the data is stored. While privacy is desirable, regulations require scrutiny against money laundering, terrorist funding etc. What is needed is a properly designed digital identity so that a functional middle ground can be reached that enables privacy but works with the existing compliance and financial networks.

One solution is a self-sovereign decentralised identity, or SSDID, powered by blockchain and smart contracts. The argument is that SSDIDs are digitally native, just like CBDCs, and can be built directly onto the same networks for complete interoperability. They can act as a profile, wallet, and credentials for access all at the same time. SSDID offer a frictionless means of payment both online and at physical retailers, instantly transferring funds at the time of purchase. SSDIDs are technically challenging to forge, obscure, or alter.