What is the PBMs architecture?
A PBM based architecture has four distinct components.
1. Digital currency backing PBM
The digital currency backing a PBM serves as collateral for the PBM. When the conditions of a PBM are fulfilled, the underlying digital currency is released, and ownership is transferred to the target recipient. To be utilised as a backing digital currency, a digital asset needs to be a good store of value, unit of account and a medium of exchange. Backing digital currencies could come in the form of CBDCs, tokenised deposits or stablecoins that are properly regulated in a manner that provides confidence in the stability of their value (herein known as “securely backed stablecoins”). Backing digital currencies could be implemented as an ERC-20 fungible token smart contract.
2. PBM Wrapper
The PBM Wrapper implemented in the form of smart contract code specifies the conditions
upon which an underlying digital currency can be used. The PBM Wrapper could be programmed whereby the PBM can only be utilised for its intended purposes, such as validity within a certain period, at specific retailers, and in predetermined denominations. Once the specified in the PBM Wrapper are met, the underlying backing digital currency will be released, and transferred to the recipient. For example, the purpose layer could be implemented as an ERC 1155 Semi-Fungible Token smart contract.
3. PBM Infrastructure
The ownership of a digital currency and the smart contracts governing its usage are executed
upon a ledger-based infrastructure. The PBM infrastructure establishes the foundation for the implementation of Programmable Money and enables new possibilities for interactions among consumers, merchants, financial institutions, and government agencies. The ledger-based infrastructure could be DLT or non-DLT based.
4. PBM Wallet
PBM wallets are used by users to send and receive PBMs and the respective backing digital currencies. They refer to cryptographic wallets which are software programmes that hold users’ private keys that grants them access to PBMs.