Meet Neha Narula, an MIT researcher who helps senators understand digital currencies.

This new line of research has caused some conflict within the DCI; after all, many researchers are interested in cryptocurrencies because it eliminates the need for banks or government financial agencies. But Narula found a way to bring crypto enthusiasts around the table with central banks to discuss what lessons Bitcoin could bring to the development of a bank-backed digital currency.

Narula considers the DCI to be neutral territory. “These worlds are very different, the world of cryptocurrencies and the world of central banks,” she says. “We see ourselves kind of like a bridge.”

It’s not always easy. “There are real tensions,” says Shira Frank, DCI strategic adviser.

When Frank first began researching digital currency in 2018, she felt that the cryptocurrency had become too toxic and worried that the technology could not be saved. “It went so far in the wrong direction,” she recalls.

But Narula told Frank that the cryptocurrency still has untapped potential, and that much of its toxicity stems from a widespread failure to predict the most negative outcomes given its hasty evolution. Narula says that we are now dealing with what we have done because of this inadequate planning, but we can use what we have learned from cryptocurrency mistakes to develop new digital currencies that can better serve people.

Narula says bitcoin research helps her team answer fundamental questions about other kinds of cryptocurrencies as well as CBDCs. It should be possible to develop a CBDC for “those who are often most disadvantaged” in the current monetary system, she said. Done right, this could help reduce red tape around welfare programs or eliminate fees that people without bank accounts often have to pay to access their cash.

Earlier this year, Project Hamilton unveiled its design for a fast payment processor that can process 1.7 million transactions per second, seemingly paving the way for the US to launch a CBDC. Then, in March, President Joseph Biden issued an executive order to step up CBDC research to keep America ahead of other nations in the fintech race.

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Biden expects a technical assessment of what it will take to develop a CBDC to be released by September and Project Hamilton will brief on that policy. The US is not the only country turning to DCI; Narula says the group has recently begun advising other countries on CBDCs. She adds that there are still unanswered questions when it comes to their adoption.

Narula’s primary concern with any new digital currency, be it CBDC or cryptocurrency, is to ensure that users’ privacy is protected. She is overseeing what is happening with China’s CBDC, which has already been used to transact billions of dollars. Experts point out that China could eventually link it to the country’s social credit system (which uses citizens’ financial data to gauge their trustworthiness), warning that it could greatly increase social monitoring in that country and provide the government with new levels of control. It may even be able to deny citizens access to their own money in response to their social media posts.

Nobody knows how it will all turn out. But Narula plans to be there, at the glowing Bitcoin sign at the DCI office, to help navigate this new future. “We want to understand the implications of various technological developments,” she says, “whether they are ready for it or not, money is really changing.”

Ashley Belanger is a freelance science writer based in Chicago..

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