Introduction

In a 2019 speech, Bank of England governor Mark Carney said that “Technology has the potential to disrupt the network externalities that prevent the incumbent global reserve currency from being displaced.” Certainly one of the most interesting places where technology is disrupting payments and finance is in cryptocurrencies. Cryptocurrencies have emerged from open source development communities in large part because electronic transaction systems are too expensive and they have not evolved fast enough to keep pace with the demand for retail online digital payments and more sophisticated types of financial transactions. The wide variety of experimentation in cryptocurrencies is causing technologists and central bankers to rethink the interface to money and explore a digital form which can be held by users and companies directly. This could lead to a financial system with a simplified institutional structure, capable of serving the public at a much lower cost. Though there has been much discussion about the policy design for central bank-issued digital currency (CBDC), there are important technical points missing from the conversation: CBDC should not be a direct copy of existing cryptocurrencies with exactly the same design and features but there are things we can learn from their emergence - the usefulness of programmability in money and the importance of preserving user privacy.