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

This new line of research has introduced some conflict into DCI; after all, many researchers are interested in cryptocurrency because it eliminates the need for government banks or monetary agencies. But Narula has found a way to put crypto enthusiasts at the table with central bankers to talk about what lessons Bitcoin could take for the design of a digital currency backed by banks.

Narula sees the DCI as neutral territory. “These worlds are very different, the world of cryptocurrency and the world of central banking,” he says. “We see ourselves in part as a bridge.”

It’s not always easy. “There’s a real tension,” says Shira Frank, DCI’s strategic advisor.

When Frank began researching digital currency in 2018, he felt that cryptocurrency had become too toxic and worried that the technology would not be recoverable. “It goes so far in the wrong direction,” he recalls thinking.

But Narula told Frank that cryptocurrency still had untapped potential and that much of its toxicity stemmed from widespread failure to predict the most negative outcomes amid its hasty evolution. Narula says that we are now dealing with what we have done through this inadequate planning, but that we can use what we learn from the mistakes of cryptography to design new digital currencies that can better serve people.

Narula says Bitcoin research helps his team answer key questions about other types of cryptocurrencies and CBDCs. It should be possible to design a CBDC to work for “those who are often the most disadvantaged” by the current monetary system, he says. Properly implemented, it could help reduce bureaucratic paperwork in social support programs or eliminate the commissions that people without a bank account often have to pay to access their cash.

Earlier this year, the Hamilton Project unveiled its design for a fast payment processor that can handle 1.7 million transactions per second, apparently paving the way for the United States to launch a CBDC. Then, in March, President Joseph Biden issued an executive order to step up the CBDC’s investigation, a bid to keep the United States ahead of other countries in the financial technology race.

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Biden expects a technical assessment of what will be needed to design a CBDC to be released in September, and Project Hamilton will report on this policy. The United States is not the only country that uses DCI; Narula says the group recently began advising other countries on CBDC as well. There are still unanswered questions when it comes to adopting them, he adds.

Narula’s main concern for any new digital currency, be it a CBDC or a cryptocurrency, is to make sure it protects users’ privacy. He is watching what happens to China’s CBDC, which has already been used to conduct multi-billion dollar transactions. Experts have pointed out that China could link it to the country’s social credit system (which uses citizens’ financial data to assess its reliability), warning that this could greatly increase social monitoring in that country and allow the government new levels of control. It could even deny citizens access to their own money in response to their posts on social media.

No one knows how everything will unfold. But Narula plans to be there, with the brilliant Bitcoin sign in the DCI office, to help navigate this new future. “We want to understand the implications of different technology designs,” he says, “whether prepared or not,” money is really changing. “

Ashley Belanger is a Chicago-based freelance science journalist.

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