Norway, a weak Nordic country, is likely not to attract special attention in the global data encryption map. With 22 blockchain technology solution providers, the host country is not prominent even in terms of geography

However, with the competition of evaluating and implementing the Central Bank Digital Currency (CBDC) accelerating every day, this Scandinavian country has adopted a proactive view on its own national digital currency. In fact, this is one of the first countries to establish CBDC as early as 2016.

Cash has been lost

In recent years, with the rise of cashless payment methods and anxiety about illegal behavior of cash encouragement, some Norwegian banks have taken action to completely withdraw cash stock index futures.

In 2016, Trond Benestuen, a former senior executive of DNB, a key Norwegian bank, proposed to terminate the use of cash as a payment method in Norway:

"Today, there are about 50 billion kronor in the circulation of commodities, and the (central bank of the host country) Noggi Bank only accounts for 40% of its demand. This means that 60% of the capital demand is far beyond all monitoring scope."

A year ago, Nordea, another large and medium-sized bank in Norway, also refused to accept cash, leaving only one branch of Oslo Central Station to settle cash again.

Negative emotions coexist with the passion of BTC (BTC). Since DNB allows customers to use its mobile application to purchase BTC, the local people's court stipulates that convicted drug traffickers pay for digital currency punishment, and the local press has extensively discussed the investment of digital currency projects.

Last year, the chairman of the board of supervisors of Norges bank, the Norwegian intermediate bank, responsible for financial stability, Torbj ø rn H ⏴ geland, outlined the cash application objectives of this new project to replace the host country:

"In such an environment, the decline in the use of cash and many structural trends in the payment platform are important driving factors for this project."

The inspection of the Norwegian CBDC will continue until June 2023, and will be completed with the proposal of the intermediate bank on whether to implement the prototype.

Ethereum is the key

In September 2022, Norges Bank released the open source of the digital currency sandbox game encouraged by Ethereum. This sandbox game can be used from GitHub. It is dedicated to providing a socket for interacting with the detection network, and is suitable for forging, lighting and transmitting ERC-20 dynamic password and other services.

However, the second part of the source code (to be released in the middle and late September) has not been released. As mentioned in an online article, the initial application of open source is not "technical will be based on open source signals", but "an excellent starting point for learning and training as much as possible in cooperation with developers and alliance partners"

Earlier, the bank mentioned that Nahmii, the key partner of the project's infrastructure construction, was a Norwegian real estate developer with the same name as Ethereum's second-floor expansion solution. The enterprise has been committed to the expansion of technology like Ethereum for many years, and has its own network and token. At this time, the test network of Norwegian CBDC is not the public Ethereum ecosystem, but the private version number of the company's blockchain technology Hyperledger Besu.

At the end of 2022, Norway joined the new ice-breaking trip project, which launched a collaborative exploration with the central banks of Africa, Norway and Sweden on how CBDC can be used as a cross-border payment platform. Under the framework, the three central banks will connect their China proof-of-concept CBDC system software. The final report of this project is scheduled to be released in the first quarter of 2023.

Some small details, extensive problems

In terms of hope and anxiety, the understanding of the Norwegian CBDC project is the national regulatory environment. Like neighboring countries in the physical geography, Norway is famous for its cautious attitude towards the digital money market, its high taxes, and the relatively small scale of China's data encryption ecosystem. A recent study by the EU Blockchain Observatory may show that Norway's total equity financing is 26.9 million US dollars.

Sander Andersen, a Norwegian serial entrepreneur, recently moved its financial management company to Switzerland, Germany. He wondered whether the upcoming new project would coexist peacefully with the field of data encryption. In her chat with Coin Telegram, she said that there are enough problems for Chinese technology entrepreneurs:

"Although the host country has brought strong infrastructure for entrepreneurs in other industries, such as low energy costs and compulsory education, these benefits have not extended to the digital field. The negative tax faced by digital companies makes it basically impossible to compete with the market in more friendly business service jurisdictions."

Because the digital currency of the central bank has the potential to compete with the personal digital currency market, and all government departments aim to strictly control financial investment as much as possible, Andersen does not think Norway is the exception:

"The new CBDC project of the Norwegian Central Bank may also pose a threat to the litigation status of the individual stable currency in the host country. The addition of CBDC is likely to strengthen the supervision and guidance of the individual stable currency and make it difficult for these enterprises to operate."

Michael Lewellen, the head of OpenZeppelin enterprise solution architecture design, said in an interview with CoinTelegram that the company provided a contract library for the Norges Bank project, which didn't sound so negative. He stressed that, from a technical point of view, there is nothing that can prevent individual stable coins from being sold and operated by the public and private Ethereum together with CBDC on the network, especially if they apply universal and adaptive token specifications (such as ERC-20)

However, from a policy point of view, nothing can prevent intermediate banks from carrying out strict accounting control and implementation of KYC norms, which is the area where CBDC seems to be the development trend of course. Lewellen stressed that with the rapid development of blockchain ecosystem software, banks are not easy to sit idly by. Because there are many shadow bank-themed activities on the chain, he added:

"CBDC has brought a better level of strict control and KYC rules for CBDC holders to the intermediate banks, but it is very interesting to apply the same standard to the entity line using the NGO stable currency."

How can Norwegian CBDC provide any reassuring items at the level of personal information security? From a technical and strategic point of view, this is unlikely. Today, there is no perfect solution. It can also allow personal privacy at the application level of CBDC in a compliance way.

Basically, there is no doubt that the digital currency of all countries should use KYC and many ways we see in the bank to combine each detailed address with the real identity. In fact, if it is carried out in the personal account book as the Bank of Norway is currently testing, CBDC will not only reduce the personal privacy of individual customers, but also reduce the public clarity of the blockchain.