Millicent, a firm that specializes in distributed ledger technology and fintech, has announced that it had successfully completed the world’s first test of a Full-Reserve Digital Currency (FRDC) designed for the retail market. Millicent’s FRDCs are private digital currencies that are tethered to fiat currency. In addition, they are 100% backed by liquid “cash” deposits held in a separate account protected by a third party that is regulated and held directly at the central bank.
The UK government’s R&D department is partially funding Millicent. The purpose of the test was to provide Innovate UK, a division of the United Kingdom’s Research and Innovation agency, with a technology demonstration. This is the UK’s national financing body for advanced scientific and technology research.
Why Millicent’s FRDC success matters
With this presentation, Millicent has reached an important milestone. It aligns with in its ambition to create a financial infrastructure that integrates distributed ledgers and smart contracts with existing financial systems. During this demonstration, Millicent’s FRDC network demonstrated its minimal fees and near-instant settlement. It also demonstrated adaptability by demonstrating payments via mobile app, custodial wallet, and non-custodial wallet, among other methods.
Many different use cases for FRDC underwent testing. For example, one test involved micropayments of as little as £0.15 to access pay-walled newspaper content. It also showed support for paying with a QR code, along with larger peer-to-peer payments.
The FRDC prioritizes the safety and satisfaction of its customers. In a virtual environment, one of the UK’s largest consumer banks mimicked fiat on-ramping using Faster Payments. Also, it t was possible to create FRDC tokens tied to the British Pound on-chain and to pay and settle in multiple ways.
FRDC vs CBDCs and stablecoins
Because of the lack of transparency and the often risky designs of stablecoins, they have recently been under increased criticism. As a result, mainstream acceptance has been sluggish, resulting in substantial consumer losses. Also, some people remain sceptical of CBDCs because of concerns regarding privacy and potential abuse.
“We are extremely proud to have presented this world-first solution to Innovate UK—especially during such a turbulent time for the crypto markets. Recent troubles with popular cryptocurrency platforms highlight the importance of projects like Millicent that focus on safety, stability, and real-world benefits,” said Millicent’s CEO, Stella Dyer.
To solve these issues, FRDC is ready in anticipation of the UK’s rapid adoption of regulated digital payments. Because it is a privately-issued digital currency, it provides a level of disintermediation between the private sector and end consumers. Furthermore, its assets are backed fully by liquid reserves.
Stella Dyer, Millicent’s co-founder and CEO, is on a mission to promote financial inclusion. Millicent’s network is a success with a public-permissioned infrastructure and democratic community governance. People who aren’t in the financial industry can now participate in macroeconomics. Essentially, it tackles the major flaws in the payment sector, both traditional and crypto.