|The Transferable Digital Notes System is a viable solution allowing central banks to put in circulation fiat currency in digital form.|
All central banks are evaluating the feasibility of issuing what is called Central Bank Digital Currency or CBDC. The name seems to imply that a new currency will be put in circulation by the central bank. The currency of the United States is the US dollar and it is a fiat currency. To clarify, the Transferable Digital Notes Project is proposing a digital form of the US Dollar, not a digital currency. It is more appropriate to call this effort ‘digitizing fiat currency’ or creating fiat currency in ‘digital form’.
Transferable Digital Notes Project (TDNSYS), offers a simple, reliable, and easy to implement solution for creating fiat currency in ‘digital form’. Transferable Digital Notes or TDNs have a behavior almost identical to paper money. This solution is not based on blockchain or distributed ledger technology. The main strength of the system consists in the fact that there is no debiting and crediting of accounts when a transaction is performed. The user does not have an account on the system, all transactions are anonymous (the anonymity can be waived if the holder of the TND so desires).
The TDNSYS specifications are generic and can be used for other purposes. For example, a system can be designed to implement banking transactions without the need for a clearing process merchants reward points systems, gift cards, or play money.
A TDN is a unique, large, and impossible-to-guess string of numbers associated
with a cash value. The long string of numbers is called the
The Transferable Digital Notes System is only the technical solution to Central Bank Digital Currency. Putting in circulation Digital Currency is a very complex process with legal, social and economic implications.
Here are the main features of TDNSYS and Transferable Digital Notes (TDNs):
TDNSYS is based on the client/server model. The server side is owned by the Central Bank.
The main component is the TDN Repository, a very fast, ACID-compliant
ISAM database in compliance with
all the security, reliability, and redundancy applying to today’s financial systems.
The server side interacts with the clients through a published API.
Performing a TDN transaction requires only one or two database operations and minimum processor time.
When a TDN is secured with a
Clients can be bank terminals, cash registers, personal digital devices connected to the Internet, ATMs, vending machines, eCommerce websites, or desktop applications. The server side of TDNSYS contains a website supporting all TDN transactions.
In a TDN transaction, the payer gives the payee the TDN and the payee requests from the Central Bank server-side of TDNSYS the ownership or the TDN in order to prevent double-spending. The payee is now in the possession of the cash value associated with the TDN. The payer will not be able to use the TDN in another transaction.
Here is a possible infrastructure for a TDN system. (see Infrastructure for more details)