The Netherland’s central bank, De Nederlandsche Bank (DNB), has posted a blog post saying that as yet, blockchain is not fit for purpose in terms of being a payment system.
The bank maintains that that DLT won’t suit the central bank’s existing financial structure primarily due to lack of scalability with large volumes of transactions. The DNB was referring to a series of tests conducted over a period of three years called project Dukaton, testing four DLT prototypes.
The Dukaton team applied different consensus algorithms and validation mechanisms in the later stages of the tests, after experimenting with an original prototype based on the Bitcoin blockchain.
The bank admits that the blockchain does offer benefits, in that it can increase the bank’s resistance to external attacks, but the downside pointed to poor levels in terms of “scalability, capacity, and efficiency”.
“The current payment systems are very efficient, can handle large volumes and provide the legal certainty of payment. The blockchain solutions tested show that they are not sufficiently efficient, with regard to costs and energy consumption, and they cannot handle large numbers of transactions,” the post read.
The bank is prepared to look again, further down the track, to see if a better-designed algorithm might better be able to meet the technological requirements of Holland’s financial system.
In similar work, South Africa’s central bank yesterday announced positive results for the trial of its blockchain-based system for interbank clearance and settlement, after conducting a 14-week proof of concept trial. The trial settled the country’s 70,000 daily payment transactions within two days using a Quorum blockchain platform, the same as that developed by JPMorgan.
The South African central bank has now established its own self-regulatory organization to oversee crypto industry developments aimed at preventing “systemic risk”, although the bank stressed it was cautious not to “throttle growth”.
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