*3.1. Problem with the Transfer between Blockchain-Based Heterogeneous Cryptocurrencies and CBDCs*

It is easy for users to transfer cryptocurrencies within the same blockchain (e.g., Bitcoin blockchain [7], etc.). For example, when an originator with a Bitcoin wallet wants to transfer to a beneficiary with a Bitcoin wallet, the originator can easily transfer Bitcoins to the beneficiary using the beneficiary's wallet addresses within the Bitcoin blockchain.

However, it is difficult for users to transfer cryptocurrencies between heterogeneous blockchains (e.g., a transfer between Bitcoin blockchain and Ethereum, etc.). For example, when an originator with a Bitcoin wallet wants to transfer to a beneficiary with an Ether wallet, the originator cannot transfer Bitcoins to the beneficiary using the beneficiary's wallet addresses within the Ethereum. This problem is due to the lack of interoperability between heterogeneous blockchains. Due to the nature of blockchain, transfer between blockchain-based heterogeneous CBDCs has the same problem as cryptocurrency. Additionally, transfer between blockchain-based cryptocurrencies and CBDCs encounters the same problem.

### *3.2. Other Approaches for the Transfer between Blockchain-Based Heterogeneous Cryptocurrencies and CBDCs*

Several organizations and studies have made proposals to solve the problem mentioned in Section 3.1, but their proposals differ from the proposed service model in terms of concept and concreteness.

The inter-blockchain communication (IBC) protocol is proposed in [8]. The Cosmos is a network of independent parallel blockchains with a Tendermint [9] consensus algorithm, such as the practical byzantine fault tolerance (PBFT [10]) consensus algorithm. The Cosmos Hub will be the first blockchain in the Cosmos network. Many other blockchains are connected by the Cosmos Hub using the IBC protocol. The Cosmos Hub can track many token types and record the total number of tokens for each connected blockchain. All inter-blockchain coin transfers go through the Cosmos Hub, allowing tokens to be transferred from one blockchain to another without a liquid exchange between blockchains. The Cosmos Hub is an intermediary that connects heterogeneous blockchains.

The heterogeneous multi-chain framework Polkadot is proposed in [11]. Polkadot is a sharded blockchain, meaning it connects several blockchains together in a single network, allowing them to process transactions in parallel and exchange data between blockchains [12]. Polkadot allows any type of data to be sent between any type of blockchains [12]. Polkadot is an intermediary connecting heterogeneous blockchains, which is very similar to the Cosmos Hub.

The hub-and-spoke payment route called universal payment channels (UPC) is proposed in [13]. UPC can be used to support digital currency transfers of funds across different networks through payment channels. UPC hub can be useful in the context of CBDCs to support cross-border payment flows between CBDCs that may run on different blockchains [13]. UPC hub can also play an important role between private stablecoins [14] and public CBDCs by providing permissioned access for whitelisted stablecoins to be interoperable with CBDCs. The UPC hub concept that emerged would connect different blockchains by establishing dedicated payment channels between them—whether that means connecting CBDC blockchains between countries or connecting CBDC blockchains with vetted private stablecoin blockchains [15]. UPC hub is an intermediary that connects heterogeneous blockchains for CBDCs and stablecoins.

The blockchain implementation method for interoperability between CBDCs is proposed in [16]. This paper focuses on a blockchain system and management method, based on the ISO/IEC 11179 metadata registries (MDR) [17], for exchanges between CBDCs that records transactions between registered CBDCs. Furthermore, this paper describes implementing the blockchain system and experiment with the operation method, measuring the block generation time of blockchains using the proposed method.

The blockchain interoperability towards a sustainable payment system is proposed in [18]. This paper investigates different blockchain interoperability approaches, including industrial solutions, categorizing them, identifying the key mechanisms used, and listing several example projects for each category. As examples of the underlying technologies for cross-blockchain transactions, this paper describes the notary schemes such as centralized cryptocurrency exchanges (e.g., Coinbase [19], Binance [20], etc.), the sidechain-based solutions, the blockchain routers, the hashed time locks, and the industrial solutions (e.g., Cosmos Hub [8], Polkadot [11], etc.).

The formation and development of Von Hayek's theory of private money is analyzed in [21]. This paper concludes that when the national currency is replaced by digital currency, due to the international nature of digital currencies, both developing and developed economies will be vulnerable to 'digital dollarisation'. Moreover, this paper describes how governments can ask central banks to use a CBDC, which is preferable to a national currency for forecasting, computation, and accounting.

The main objective of this paper is to propose an interoperable architecture between heterogeneous blockchains without intermediaries, and a new decentralized P2P transfer service model based on the proposed interoperable architecture between blockchain-based heterogeneous cryptocurrencies and CBDCs.

#### **4. Decentralized P2P Transfer Service Model and the Service Scenarios**

This section proposes a decentralized P2P service model based on an interoperable architecture for transferring between blockchain-based heterogeneous cryptocurrencies and CBDCs to solve the transfer problem mentioned in Section 3.1.

#### *4.1. Service Model*

The decentralized P2P service model, based on the interoperable architecture for transferring between blockchain-based heterogeneous cryptocurrencies and CBDCs, includes transfer between cryptocurrencies, transfer between cryptocurrency and CBDC, and transfer between CBDCs. In the proposed service model, the transfer agent is an entity that receives cryptocurrency and CBDC from the originator and sends another cryptocurrency and CBDC to the beneficiary. Any entity can be a candidate for the transfer agent.

In Figure 3, cryptocurrency-1 (e.g., Bitcoin) is transferred from the originator's wallet to the transfer agent's wallet-1 on blockchain-1. Contact node-1, running on blockchain-1, directly provides the ledger data for the transfer of cryptocurrency-1 to contact node-2, running on blockchain-2, without any intermediaries (see Figure 2). Cryptocurrency-2 (e.g., Ether) is transferred from the transfer agent's wallet-2 to the beneficiary's wallet on blockchain-2.

In Figure 4, cryptocurrency-1 (e.g., Bitcoin) is transferred from the originator's wallet to the transfer agent's wallet-1 on blockchain-1. Contact node-1, running on blockchain-1, directly provides the ledger data for the transfer of cryptocurrency-1 to contact node-2, running on blockchain-2, without any intermediaries (see Figure 2). CBDC-1 (e.g., Korean CBDC) is transferred from the transfer agent's wallet-2 to the beneficiary's wallet on blockchain-2.

**Figure 3.** The service model for the transfer between cryptocurrency-1 and cryptocurrency-2.

**Figure 4.** The service model for the transfer between cryptocurrency-1 and CBDC-1.

In Figure 5, CBDC-1 (e.g., Korean CBDC) is transferred from the originator's wallet to the transfer agent's wallet-1 on blockchain-1. Contact node-1, running on blockchain-1, directly provides the ledger data for the transfer of CBDC-1 to contact node-2, running on blockchain-2, without any intermediaries (see Figure 2). CBDC-2 (e.g., US CBDC) is transferred from the transfer agent's wallet-2 to the beneficiary's wallet on blockchain-2.

The key features of BIMS are included in Figures 3–5. BIMS registers and maintains the information of the blockchains (e.g., the names of the blockchains, names of the consensus algorithms, names of the cryptocurrencies, IP addresses of the contact nodes, etc.), and distributes common operations (COPs) to the contact nodes running on the registered blockchains. The transfer agents are elected by a consensus algorithm. The transfer records are stored and maintained.

**Figure 5.** The service model for the transfer between CBDC-1 and CBDC-2.
