Perspectives on Objectives and Design Principles in Offline Payments with Central Bank Digital Currency

arXiv:2512.10636 · cs.CR · Submitted 2025-12-11 · Read on arXiv

Listen

Transcript

Introduction to the show: ident: Security Radio. Generated commentary on the latest security and cryptography papers.

Nadia: We're looking at the paper: "Perspectives on Objectives and Design Principles in Offline Payments with Central Bank Digital Currency".

Elias: The gist In this work, fundamental design principles for a central bank digital currency (CBDC) with an offline functionality and corresponding counter measures are discussed.

Nadia: First, who's behind it and why it matters.

Paper summary: Nadia: So we're looking at this paper now, "Perspectives on Objectives and Design Principles in Offline Payments with Central Bank Digital Currency." It’s about figuring out what you need to focus on when you design a central bank digital currency that can work offline.

Elias: Right, so the authors are setting up three main goals they think every single proposal needs to hit: Access Control Security, Security against Depositor Misbehavior, and Privacy by Design.

Priya: That sounds like a good framework because it breaks down the big security and privacy problems into manageable chunks for a design team.

Nadia: Exactly. The core of what they're doing is taking these abstract goals and trying to match them up with actual technical things you can build into the system as countermeasures.

Elias: Yeah, that alignment part is what they emphasize—they figure out which objective pairs best with which design element to actually stop the threats.

Priya: I’m interested in how they frame those objectives because if you don't define what success looks like upfront, it’s easy to end up building a system that solves the wrong problem. What do they think are the most critical things for an offline CBDC?

Nadia: Well, they pinpoint three major objectives right at the start: one is Access Control Security, which is just protecting a user's funds from unauthorized access by other users.

Elias: That translates into needing transaction authenticity, which they say you can counter with Digital Signatures based on Asymmetric Cryptography.

Priya: Digital signatures sound like a solid starting point for that access control idea, but what about the other two objectives they mention?

Nadia: The second objective is Security against Depositor Misbehavior, which is all about keeping the integrity of the environment, maybe a wallet, safe from its own owner doing something bad to it.

Elias: That points directly toward things like double-spending, which they define as someone trying to give two different users the false impression they both have that they're being transferred the same asset.

Paper summary: Priya: So, keeping the ledger honest against misuse by the owner is a key concern when we talk about offline functionality. And what about privacy in this context?

Nadia: The third objective is Privacy by Design, which means you have to bake privacy protections right into the system's architecture from day one.

Elias: They link that to goals like User Anonymity towards the payment counterpart and Transaction confidentiality, with methods like Blind Signature Schemes or Zero-Knowledge Proofs being suggested as tools for that.

Priya: So, we have these three big buckets: protecting access, stopping internal misuse, and building in privacy from the start. The paper claims the main thing is that you just have to align those objectives with concrete design elements to build effective countermeasures.

Nadia: That’s what they conclude—that certain objectives and their corresponding countermeasures don't interfere with each other much. But there's a big consequence they draw: for offline systems, you absolutely need secure hardware or something functionally equivalent, like trusted execution mechanisms, to handle the integrity of the wallet.

Elias: That’s a strong point because they say that in an offline setting, you can't rely on things like a Trusted Authority being available to stop those double-spending race attacks. Secure hardware becomes that anchor of trust when the central authority isn't there.

Priya: So, the implication for someone just listening is that if you build an offline CBDC, you can’t just rely on software and cryptography alone to guarantee that the wallet itself isn't being manipulated or drained by its owner.

Nadia: Right. It moves the conversation from just "can we use crypto?" to "what specific piece of hardware do we need to integrate into the system architecture to make this work reliably offline?"

Elias: And they suggest that ZKP and Blind Signature Schemes can actually be embedded onto that secure hardware, making them part of the protocol itself instead of just being tacked on later.

Paper summary: Priya: That's interesting because it suggests a deeper level of integration, not just adding a feature. But what are the practical limitations they point out? Where does this whole design idea still struggle?

Nadia: They state plainly that double-spending can't be completely prevented in offline scenarios using just software or cryptography by itself. It really needs that secure hardware component to function as an additional anchor of trust when the central authority isn't accessible.

Elias: That makes sense from a cryptographic proof standpoint; you need a mechanism that enforces integrity outside the network context. The paper focuses on identifying these design elements, but it doesn't necessarily solve every single performance challenge yet.

Priya: So, while they map out the ideal structure—Access Control Security and Privacy by Design paired with hardware-backed integrity—the next step they point toward is focusing on performance benchmarking and scalability to see if this offline CBDC can actually be made usable in the real world.

Nadia: That’s the path forward then: design based on these three objectives, use secure hardware to nail the integrity of the wallet, and then you have to figure out how to make it fast enough for everyday transactions.

Elias: It seems like a solid map for anyone thinking about building these systems, showing how security and privacy goals map onto specific technical implementations like ECDSA or ZKP.

Priya: And the paper itself is really useful because it takes those big, vague concepts—like "security" and "privacy"—and turns them into a concrete checklist of what you need to consider when designing an offline payment system.

Nadia: So, if you're thinking about a retail CBDC with offline features, this paper gives you the structure: define your three objectives first, align them to design elements like secure hardware for integrity and ZKPs for privacy.

Elias: And it highlights that the main hurdle is ensuring that hardware actually provides that necessary trust anchor when things are offline.

Priya: It’s a good paper because it clearly shows the relationship between the abstract security goals and what kind of actual technology—cryptography versus hardware—is required to achieve them in an offline environment.

Conclusion: Nadia: So we’ve gone through how they set up these three main goals for offline CBDCs: Access Control Security, Security against Depositor Misbehavior, and Privacy by Design.

Elias: And we looked at how those goals map onto technical stuff like digital signatures and zero-knowledge proofs.

Priya: The core idea seems to be that you have to align those design objectives with specific features in the system architecture as countermeasures.

Nadia: Exactly, they found that some objectives and their countermeasures don't really interfere with each other much.

Elias: But the big result is that for offline systems, you can’t just rely on software or cryptography alone to stop double-spending attacks on the wallet.

Priya: So what does this actually mean for a person who just listens? It means you need more than just a fancy digital signature to keep your offline funds safe.

Nadia: It points directly toward needing secure hardware, something like Secure Elements, as that necessary anchor of trust when the central authority isn't around.

Elias: They argue that secure hardware is essential because the trusted authority isn't available in an offline setting, so it has to step in to protect the integrity of things like double-spending race attacks.

Priya: So basically, they’re saying you need dedicated modules for each of those objectives, with a specific design choice for each one.

Nadia: Right. The authors conclude that while cryptography helps with privacy and user data protection, you still need that hardware to enforce integrity at the wallet level and stop balance manipulation.

Elias: And they suggest embedding things like zero-knowledge proofs right onto that secure hardware so they become part of the protocol itself rather than just something tacked on later.

Priya: The big thing for me is their final thought about future work, focusing on performance benchmarking and scalability to see how actually usable these offline CBDCs can get.

Nadia: So, the paper ends by suggesting a modular approach where each of those three objectives gets its own dedicated module with the right design choice.

Elias: It’s a framework for thinking about the whole system, tying the abstract security goals directly to concrete implementation choices.

Priya: It gives us a solid structure for analyzing five different payment system proposals they looked at.

Nadia: It shows that designing an offline CBDC isn't just about picking crypto; it’s about making careful trade-offs between security, integrity, and privacy through specific hardware choices.

Deutsche Bundesbank

cs.CR

Submitted: 2025-12-11

Updated: 2026-10-16

Comments: 21 pages main body, 29 pages overall; 10 tables; 1 figure; Version as accepted by MDPI Fintech

License: http://arxiv.org/licenses/nonexclusive-distrib/1.0/

Importance score: 82/100

The gist: The gist In this work, fundamental design principles for a central bank digital currency (CBDC) with an offline functionality and corresponding counter measures are discussed.

Key concepts

Access Control Security: This objective ensures that only authorized users can access a specific user's funds. It translates into requiring transaction authenticity, which the paper suggests is best achieved using digital signatures based on asymmetric cryptography like ECDSA to verify messages.
Security against Depositor’s Misbehavior: This addresses threats where the owner of an offline CBDC might try to misuse it, such as attempting a double-spend attack. The paper defines this as a specific threat in offline settings and concludes that secure hardware is necessary to prevent these integrity issues.
Privacy by Design: This methodology mandates embedding privacy protections directly into the system's initial architecture rather than adding them later. Key goals include user anonymity, transaction confidentiality, and non-traceability, which can be achieved using techniques like Blind Signature Schemes or Zero-Knowledge Proofs.

Summary

The gist In this work, fundamental design principles for a central bank digital currency (CBDC) with an offline functionality and corresponding counter measures are discussed.

Objectives and Design Principles

The paper identifies three major objectives for any such CBDC proposal: (i) Access Control Security - protection of a user’s funds against unauthorized access by other users; (ii) Security against Depositor’s Misbehavior - preservation of the integrity of an environment (potentially the wallet) against misbehavior of its owner (for example, double-spending), and (iii) Privacy by Design - ensuring privacy is embedded into the system architecture. The central conclusion is the alignment of the objectives to concrete design elements as countermeasures, whereas certain objectives and countermeasures have no or minimal interferences with each other. For example, we work out that the integrity of a user’s wallet and, accordingly, the prevention of double-spending race attacks should be addressed through the adoption and integration of secure hardware within a CBDC system<ref:2512.10636#pg20>.

Security Against Depositor’s Misbehavior

The paper defines two kinds of threats in an offline CBDC setting: a security threat of the first kind, which is relative to (u, f) and aims to compromise the security of a user’s funds by trying to achieve unauthorized disposal of the funds without direct access to the device or TEE<ref:2512.10636#pg16>. A second kind threat is relative to (u, f) and is directed at fraudulently collecting exchange value from other CBDC users for f without actually legitimately and permanently transferring f to the counterparty<ref:2512.10636#pg15>. A double-spending attack is defined as a fraudulent attempt of the bearer of one asset to give two different users the false impression that they are both being transferred said asset<ref:2512.10636#pg8>. For offline CBDCs, the double-spending race attack is identified as the relevant threat condition<ref:2512.10636#pg8>. The most prominent proposal of doing this is via secure hardware (e.g. Secure Elements) and, hence, a more thorough understanding of the possibilities and limitations of trusted hardware in its own sense is necessary<ref:2512.10636#pg5>.

Access Control Security

Access Control Security aims to protect systems and data from users according to threats of the first kind<ref:2512.10636#pg5>. This objective translates into a technical requirement of Authenticity of Transactions, which is countered by Digital Signatures based on Asymmetric Cryptography<ref:2512.10636#pg5>. ECDSA is described as the current state-of-the-art standard and thus the preferable cryptographic method of choice for establishing message authenticity that is publicly verifiable, non-repudiable, and independent of pre-shared secrets<ref:2512.10636#pg14>.

Privacy by Design

Privacy by Design is characterized as a methodology that focuses on embedding privacy protections and data security into the system and processes from the very beginning<ref:2512.10636#pg9>. This involves ensuring data protection of user states and transaction statements against other participants, particularly the TA, the payment counterpart, and other eavesdropping/malicious participants<ref:2512.10636#pg10>. The key privacy goals derived are User Anonymity towards the TA, Transaction confidentiality, Non-Traceability, and Unlinkability<ref:2512.10636#pg9>. Methods such as Blind Signature Scheme (BSS) and Zero-Knowledge Proof (ZKP) are presented as suitable cryptographic methods to achieve these objectives<ref:2512.10636#pg9>.

Alignment of Objectives and Design Elements

The analysis shows an association of the objectives with dedicated design elements, serving as effective countermeasures<ref:2512.10636#pg5>. The following table summarizes the relationship between design objectives and their corresponding design elements as countermeasures<ref:2512.10636#pg5>. It is concluded that double-spending cannot be completely prevented in offline scenarios using software or cryptography alone, but needs to be addressed through secure hardware<ref:2512.10636#pg5>. Secure hardware is essential because the TA is not available in the offline setting, and it must work as an additional anchor of trust<ref:2512.10636#pg5>.

Key Takeaways

The paper concludes that while cryptographic methods are important for protecting user data and ensuring compliance with privacy-by-design principles, secure hardware is necessary to enforce integrity at the wallet level and help detect or deter attempts to manipulate balances<ref:2512.10636#pg5>. The authors emphasize that ZKP techniques and BSSs can be embedded on secure hardware, making them integral parts of the protocol rather than just independent add-ons<ref:2512.10636#pg5>. Further research should focus on performance benchmarking and scalability to understand how offline CBDCs could become technically feasible and practically usable<ref:2512.10636#pg9>. The authors also envisage developing a modular CBDC approach where each of the three objectives is addressed by a dedicated module with the appropriate design choice<ref:2512.10636#pg9>.

Improvements for AI systems

textbf Cryptographic Integration for Transaction Integrity (Access Control Security)

The improved AI system can enforce Authenticity of Transactions by using Digital Signatures based on Asymmetric Cryptography as a countermeasure, ensuring that transactions are not impersonation or interception attacks.

textbf Hardware-Enforced State Integrity (Security against Depositor’s Misbehavior)

The system can achieve the objective of Integrity of the user’s individual execution environment and wallet logic by adopting Adoption of secure hardware, which provides a hardware root of trust to protect against threats like the cloning attack.

textbf ZKP/BSS Integration for Transaction Confidentiality (Privacy by Design)

The improved system can ensure transaction privacy by using Zero-Knowledge Proofs (ZKP) and Blind Signature Scheme (BSS) to provide Confidentiality of user data, wallet states and transaction details while preserving the flow of information.

textbf Mitigation of Double-Spending Race Attacks

The system can be designed to make double spending difficult by requiring secure hardware because double-spending is systematically inherent and cannot be prevented as a matter of principle, addressing the threat through mechanisms that are not amenable to cryptographic signatures alone.

textbf Anonymity via Data Minimization

The AI system can achieve User Anonymity towards the TA by ensuring that the TA does not know who is spending, where, or when, by validating transactions with minimized data collection and avoiding embedding any personally identifiable information in the digital currency or payment protocol.