Kelly Robertson
A recent study by the Cambridge Centre for Alternative Finance has found that central banks around the world are strongly in favor of blockchain technology, with 20 percent of study participants indicating they will be using it by 2019, while 40 percent will have blockchain applications within a decade. On the other hand, many declined to give time frames, only saying that blockchain is high on their priority list.
The findings are in line with what many market researchers had already been noting, namely, that the banking industry is starting to grasp the power of blockchain technology.
Of those who expressed their interest in technology, most said they would use it for permissions platforms or protocols. Also, many indicated strong interest in both Bitcoin and Ethereum. But — and here’s the trick — they would rather use blockchain to create their own central bank-issued digital currency.
In fact, more than 80 percent of the banks surveyed said that this was the main reason they were conducting research into blockchain.
Or the technology could be too immature for adoption?
Some previous tests of blockchain by central banks haven’t ended with a promising note, though.
Earlier this year, project Stella released its findings (PDF link) after a year-long study of distributed ledgers. The 2016 attempt by the European Central Bank (ECB) and the Bank of Japan (BOJ) to use blockchain for large banking transactions has determined that the technology is not ready to take over major institutional banking challenges.
The report did praise the performance of blockchain technology, but added that it is not mature enough to be adopted by major central banks.
“In conclusion, while the test series produced promising results, it should be taken into account that no direct conclusions can be drawn from the test set-up with respect to a potential usage in production,” the report reads. “Given the relative immaturity of the technology, DLT is not a solution for large-scale applications like BOJ-NET and TARGET2 at this stage of development.”
Nevertheless, we have seen a few banks using blockchain for their transaction and documentation needs; project Stella was looking at central banks which may need a more solid solution, or — one would argue — these institutions move at a slower pace.
Governments embrace blockchain…
Perhaps central banks need more convincing, but governments from all corners of the world are embracing blockchain. Whether it’s for notarization, land records or railway lines — we are seeing a number of countries taking the “crypto route.”
What’s more, there are also innovative startups that are developing novel blockchain-based solutions as we speak. For instance, Horizon State will use the technology to deliver fraud-free voting, and there are those trying to improve the healthcare system with blockchain.
Once these sort of projects prove their worth, chances are central banks will react and before you know it — we’ll see them joining the revolution, as well.
In the meantime, we’ll keep you occupied with other interesting stuff from the “crypto world,” so stay tuned. 😉
