The Bank of England’s venture into the digital currency landscape, specifically with the development of its prospective digital version of the pound – fondly dubbed “Britcoin” – may not be as warmly welcomed as expected due to mounting concerns over privacy, surveillance, and civil liberties.
The central bank has entrusted Nuggets, a digital payments platform, with the task of incorporating identity features into the digital pound, according to Nuggets CEO Alastair Johnson. The innovative technology, Johnson explains, could facilitate not only the verification of age for purchasing age-restricted items like alcohol and cigarettes, but also citizenship status. This could open new avenues for the Bank of England to persuade the general public to use the digital currency, an aspect of a larger global trend of central bank digital currencies (CBDCs). However, the integration of such potentially invasive features has raised significant privacy-related apprehensions.
As contactless and online payments gain popularity, central banks worldwide, including the Bank of England, are exploring the CBDC terrain. A digital pound could help keep government-backed money relevant, but not without controversy.
Johnson further added that the Nuggets technology could limit companies from collecting data from purchases, potentially facilitating micro-payments, Bloomberg reported. These are transactions for minor items, like a single newspaper article, which wouldn’t require a full subscription. Nuggets has stated that this would be achieved through the use of a “self-sovereign decentralized identity,” keeping the digital pound’s infrastructure separate from the individual’s underlying data.
However, this hasn’t put to rest concerns over the potential privacy risks of CBDCs. Experts warn of the vast amount of data that could be gathered from daily transactions, especially given Nuggets’ specialization in decentralized identity systems that regulate how individuals’ data is used with each transaction.
Despite assurances from Nuggets that users would maintain control over their data and that no personal information or activity would be accessible to the CBDC token system, fears about surveillance and civil liberties persist. The perspective that the implementation of a digital pound may serve as a Trojan Horse, enabling the monitoring of individual’s transactions and actions, casts a pall over the project.
