A Centralized Digital Currency System with Rich Functions

Abstract

The developments of cryptocurrencies push central banks of many countries to consider their own digital fiat currencies. As banks are usually taken as a trusted third party, it is unnecessary to rebuild a blockchain system to rebuild trust. However, cryptocurrencies provide many interesting features except the basic financial functions. It is naturally to absorb the interesting parts of cryptocurrencies to the centralized bank system. We here extract a stateful authentication mechanism from the practice of Ethereum and show how to run puzzle and payment channel templates in a centralized system, based on which we may build a fiat currency lighting network to support direct exchanges of users.