Nuggets, a self-sovereign ID and payments platform, said on July 5 that it is working with the Bank of England on goals related to a “digital pound.”

Specifically, the project is developing a privacy and identity layer that could be used with the UK’s prospective central bank digital currency (CBDC).

Alastair Johnson, founder and CEO of Nuggets, said:

“We are honored to be selected by the Bank of England to provide the solutions for safeguarding individual privacy.”

Nuggets intends to design a secure and private system that prevents transaction tracking and correlation while upholding stringent anti-fraud and anti-money laundering standards.

To this end, Nuggets plans to incorporate zero-knowledge proofs (ZKPs) within its privacy layer. This approach allows user information to be validated without revealing the relevant information publicly. Users will have access to decentralized IDs called Peer DIDs, which Nuggets describes as “unique and confidential one-off identifier[s].”

This approach allows services to verify user identities and comply with KYC/AML rules while also allowing for user privacy. Johnson emphasized that these identities will be “owned and controlled by the user” without allowing for tracking or correlation.

Privacy is a widespread CBDC concern

Nuggets’ approach could reduce concerns that CBDCs will result in government overreach. Unlike Bitcoin (BTC) and other cryptocurrencies on public blockchains, CBDCs are issued by a central bank, meaning that governments and central banks could potentially trace users’ CBDC transactions or restrict the use of the currency.

The company noted that the Bank of England has acknowledged these issues. In May 2023, Financial Policy Committee member Carolyn Wilkins observed that “privacy and potential to monitor citizens top the list of worries” around CBDCs.

Reports from February suggest that the UK could launch its digital pound by 2030, though the country will not reach a final decision or begin development until 2025. Later reports additionally suggest that the asset will not completely replace cash.

The post Bank of England taps self-sovereign ID platform Nuggets to develop privacy layer for digital pound appeared first on CryptoSlate.

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Filed under: Bitcoin - @ July 5, 2023 11:20 pm