Something about SIGN’s CBDC design has been stuck in my head.
While going through their setup on Hyperledger Fabric I noticed they’re using a UTXO model instead of the usual account based system. That’s interesting, because most national currencies and even most CBDC designs stick to account models. It’s simple, easy to track balances, and much easier to apply rules and compliance.
UTXO works differently. It tracks individual pieces of value instead of just balances. It’s the same idea Bitcoin uses.
At first, it felt like an unusual choice. But then the privacy angle started to make sense.
With UTXO, each output can carry its own privacy settings, which works really well with zero knowledge proofs. You’re not just protecting an account you’re protecting each piece of value. That’s actually a big advantage if privacy is a priority.
But then the other side hits.
When you try to build things like vesting, conditions, or restrictions basically programmable money it gets complicated. Way more complicated than in an account model where everything sits in one place.
So now I’m stuck on this thought…
Did they choose UTXO because it’s better for privacy? Or did it just come with the system they’re using?
And more importantly can one model really handle both strong privacy and complex programmability?
Or are those two goals naturally pulling in different directions?
Still trying to figure that out. 🤔