Research on privacy-enhancing technologies shows great promise.

As the World Economic Forum revealed, over 98% of global central banks are actively engaging in research, piloting, or deploying a Central Bank Digital Currency (CBDC). While the government-backed digital currency holds immense promise for revolutionising financial systems worldwide, how to ensure robust privacy protection becomes a pivotal issue.

Computing scientists at PolyU are at the forefront of exploring the applications of privacy-enhancing technologies (PETs) to safeguard the confidentiality and integrity of CBDC transactions.

Pioneering research in privacy protection

Professor Allen Au Man-ho of the Department of Computing has contributed to a CBDC Expert Group white paper on privacy protection. His research delves into the potential of PETs including pseudonyms, zero-knowledge proofs, ring signatures, and secure multiparty computation, each offering distinct advantages in preserving transactional privacy. For instance, zero-knowledge proofs enable transaction verification without disclosing personal or transactional details.

Professor Au says, “To enhance public and industry confidence in the privacy of CBDCs, we advocate for a comprehensive strategy. It is crucial to bring together advanced PETs to enable transactions while safeguarding user identities and details.”

The research also tackles the challenges associated with integrating PETs into CBDC systems, taking into consideration architectural designs and critical factors such as scalability, risk, auditability, and regulatory compliance.

Establishing Hong Kong as a global CBDC benchmark

CBDC is poised for significant advancements in the next five years. To sustain its leading position in CBDC, “Hong Kong should continue investing in research and development while promoting innovation through collaborations among the government, industry and academia,” Professor Au emphasises. “The focus is on pioneering new CBDC technologies and use cases that can serve as benchmarks globally.”

Since the establishment of the CBDC expert group, PolyU researchers and Professor Au, along with other members, have collaborated closely with the Hong Kong Monetary Authority to examine various aspects of CBDCs and related digital currencies, aiming to accelerate their development and shape a secure and confidential CBDC ecosystem for the future.

The award-winning team

Professor Allen Au Man-ho (left) and his research team triumphed in the prestigious ZPRIZE competition 2023 for the second consecutive year with their groundbreaking technology on zero-knowledge cryptography, which has profound implications for enhancing privacy and scalability in blockchain and Web3 applications.