The French government recently unveiled its Central Bank Digital Currency (CBDC), aiming to modernize its financial system and provide a more efficient, transparent means of transactions. However, concerns have emerged regarding the technological development of the digital Euro, as users discovered several red flags in the code that could make its usage practically impossible. These issues may potentially compromise CBDC's utility, rendering it ineffective in serving its intended purpose.
One of the critical issues users noticed is that the bank needs to perform an Ethereum transaction for every single transfer. This requirement would add unnecessary complexity and increase transaction time, undermining the CBDC's objective to facilitate faster and more efficient transactions. Additionally, this reliance on Ethereum transactions may also increase the operational costs of the digital Euro, impacting its adoption rate.
Another significant concern is that every ERC20 transfer must be approved in a separate Ethereum transaction submitted by a centralized registrar. This centralized control contradicts the principles of decentralization that underpin cryptocurrencies and blockchain technology. Moreover, this centralization could make the digital Euro susceptible to manipulation, censorship and single points of failure, ultimately defeating the purpose of implementing a CBDC.
The code also reveals that the French government has designed the CBDC to require whitelisting of all users, processing all user transfers and even processing ERC20 approvals before processing the "transferFrom" function. This centralized control would not only slow down transactions but also give the government and the central bank excessive power over the digital currency's usage.
In its current form, the French CBDC appears to suffer from significant technological drawbacks that could hinder its success. To overcome these challenges, the French government must address these red flags and ensure the digital Euro is built on a foundation of decentralization and efficiency. Developing a CBDC that aligns with the principles of cryptocurrencies and blockchain technology will be crucial to ensuring its adoption and success.