CBDC: COTI Selected for Bank of Israel’s Digital Shekel Challenge

COTI, along with 14 other fintech firms, has been selected to participate in the Bank of Israel’s Digital Shekel Challenge, which aims to explore the feasibility of a central bank digital currency (CBDC).

This initiative, supported by PayPal Israel and Fireblocks, will start in August and require teams to present their proposals by late October.

The challenge is a key step toward potentially establishing a national digital currency. While the final decision from the Bank of Israel is pending, the project represents a significant move towards CBDC implementation.

COTI, known for its Layer 2 solutions on the Ethereum blockchain, is focusing on privacy and cybersecurity. Using garbled circuits technology, COTI aims to address privacy concerns associated with digital currencies. CEO Shahaf Bar-Geffen emphasized that strong privacy protections are crucial for the success of CBDCs.

As physical cash declines, CBDCs could enhance financial access for underserved populations. However, their implementation faces hurdles such as user verification and privacy issues. A successful CBDC may require integrating blockchain technology with existing financial systems.

The Digital Shekel Challenge will help the Bank of Israel understand how to effectively develop and integrate these components.