The European Central Bank (ECB) has selected blockchain company COTI as one of its partners in the development of the Digital Euro

The European Central Bank (ECB) has selected blockchain company COTI as one of its partners in the development of the Digital Euro, a potential central bank digital currency (CBDC) for the Eurozone.

COTI will play a crucial role in testing privacy features for digital payments as part of the ECB’s efforts to create a secure, efficient, and private digital currency.

Testing Privacy for Future Digital Payments

According to the official press release, the project is part of the European Central Bank’s (ECB) broader effort to modernize Europe’s monetary infrastructure.

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COTI, a blockchain-based confidentiality layer, will assist the ECB in testing how digital payments can remain private, secure, and compliant with European financial regulations.

This will be done using a simulated version of the ECB’s Digital Euro system. The goal is to create a digital payment system that works alongside physical cash, enabling fast, safe, and private transactions within the Eurozone’s $15 trillion economy.

The focus is on “conditional payments” or transactions that are only completed when specific conditions are met. For instance, a payment could be released only when goods are delivered.

Ensuring that these payments are both valid and privacy-respecting is a critical challenge. COTI’s advanced privacy technology aims to solve this by allowing information to be verified without exposing sensitive user data.

COTI’s Privacy Technology

To enable secure conditional payments, COTI will use a technology known as “garbled circuits.” This is a form of confidential computing that ensures data can be validated without revealing private information.

COTI has already demonstrated this technology in its work with the Bank of Israel’s Digital Shekel project, where it proved that cross-border transactions can be made securely while maintaining privacy.

“Privacy is a vital component for the future of Web3, ensuring user security and organizational compliance, and the same benefits apply to CBDCs,” said Shahaf Bar-Geffen, COTI co-founder and CEO.

He added that confidentiality must be built into the foundation of these systems, not introduced as an afterthought.

Collaborative Effort to Shape the Digital Euro

The ECB’s Digital Euro project involves a range of participants, such as banks, fintech companies, and technical experts, all working to make sure that digital payments are secure and meet regulatory requirements.

Reportedly, conditional payments are currently a top priority, enabling real-time verification of payments tied to specific conditions or milestones.

COTI plans to share updates as the project progresses, offering insights into how these innovations could influence the future of digital currencies.

Why This Matters

The ECB is one of many central banks exploring digital currencies. If successful, the Digital Euro could change how people in Eurozone pay for things, offering a digital option that’s both private and trustworthy. COTI’s work may help set the rules for how privacy is handled in new CBDC systems.