ZKP-Based Audit for Blockchain Systems Managing Central Bank Digital Currency

Abstract

Central Bank Digital Currency (CBDC) systems are being developed around the world and production solutions can be expected in the near future. Should a central bank allow handling of CBDC on a ledger that is not under its supervision (via platform bridging), it may wish to specify certain conformance requirements regarding the transactions. We propose a novel audit scheme based on Zero-Knowledge Proofs, which allows the operator of the bridged ledger to prove its compliance to such requirements, without revealing details about the transactions (such as the exact participants, the direction of the transfer, or the transferred value). This scheme aims to resolve the conflict between banks having to audit how CBDC is used on the bridged blockchain and consortia trying to keep sensitive data private.