The Bank of Canada (BOC) recently announced that, after a year long experiment, it would not deploy blockchain to settle inter bank transfers. BOC and a number of financial and “fintech” partners had launched Project Jasper in 2013. BOC found that the benefits of blockchain could not outweigh the advantages of the existing centralized approach. BOC clears about $130 Billion US$ a day through Canada’s inter bank transfer system. BOC and it’s Jasper collaborators found that, although they could address issues related to transaction privacy, they could only do so at the expense of system throughput and scalability and not without leaving the entire system open to a single point of failure (which, ironically, is exactly one of the reasons you might deploy blockchain in the first place). BOC notes, however, that a) in 3-5 years blockchain will have evolved to the point that the “Jasper issues” are addressed and b) that there are other applications for blockchain that BOC will work on in the immediate future.
But the general, and evolving, issue is this: when do you face a situation where a blockchain approach may be advantageous? IBM suggests you consider these questions:
- Do you have a community of business organizations external to your own – with a shared interest in process and data?
- Is there a need for that community to come to consensus on individual business transactions?
- Do you need a way to trace data (or an asset tied to the data) back to its creation? (so-called “data provenance”).
- Do historical transaction records need to be unchangeable? (aka “immutable”).
- Is “finality” important? (is there a need to have a “single source of truth” about the state of the data on the blockchain?
The Bank of Canada “inter bank project” (Jasper), met all of the five requirements above. This is why Blocktonite would add a SIXTH criterion to the above:
Can blockchain technology as it exists today (or in the intermediate future) deliver the performance and security you will require for your application?