- The trial included wrapping CBDC for use in the NFT market on blockchains.
- Mastercard’s Multi Token Network played a key role in the trial.
- There is a growing importance of CBDCs and blockchain in the financial industry.
In a groundbreaking development, Mastercard has announced the successful completion of a trial involving the wrapping of central bank digital currencies (CBDC) for use in the non-fungible token (NFT) market on blockchains, particularly Ethereum.
This landmark experiment demonstrates the fusion of traditional financial systems and blockchain technologies, promising innovative possibilities for commerce.
The CBDC folding test
Mastercard’s trial was run with the Reserve Bank of Australia (RBA), Australia’s Digital Finance Cooperative Research Center CBDC, Cuscal and Mintable. The primary objective was to assess the feasibility of integrating CBDCs into blockchain platforms. The live test involved a CBDC owner buying an NFT listed on Ethereum.
The process was simple but innovative. It “locked” a predetermined quantity of a pilot CBDC on the RBA’s pilot CBDC platform, creating an equivalent quantity of wrapped pilot CBDC tokens on the Ethereum blockchain.
In particular, security measures were taken to ensure the legitimacy of the transaction. Both buyer and seller Ethereum wallets, along with the NFT market smart contract, were thoroughly vetted, allowing only authorized participants. This demonstration demonstrated the ability to exercise audits, even on public blockchains.
The role of Mastercard’s Multi Token Network
Mastercard’s Multi Token Network, unveiled in June 2023, was instrumental in enabling this transformative trial. This network seamlessly bridges payment technology with blockchain, offering a dynamic way to connect digital currencies and NFTs.
Zack Burcks, CEO and founder of Mintable, recognized the potential of this partnership, highlighting its ability to fight fraud, enhance security and streamline record keeping.
More broadly, the Reserve Bank of Australia has shown strong interest in the potential of an Australian dollar CBDC. He envisions the CBDC to facilitate complex payment arrangements and encourage financial innovation that fiat currencies cannot replicate. However, it is noted that further research is necessary to fully understand the benefits and implications of such a digital currency.