Recently, DeNederlandscheBank (DNB) carried out experiments utilizing the decentralized ledger technology. The research stated that the most substantial shortcomings of the technology are insufficient because of the high energy consumption, combined with the lack of complete certainty about making a payment.
Nevertheless, it pointed out that these disadvantages will be wagered with financial markets being better equipped to protect against outside attacks. Upon the experimentation phase, DNB deployed a project, called Dukaton, and studied 4 prototypes using distributed ledger technology (DLT) since 2015. This experimentation had a dual aim: gathering knowledge relatively to the technology and testing the potential of blockchain for improvements in payment and securities traffic.
The first prototype included a Dukaton constructed on Bitcoin’s protocol, featuring an exclusively-built blockchain. The Dukatons were made decentrally on 5 separate laptops through long-term calculations. Parties that confirmed and verified the transactions gained a reward in the form of monetary benefits.
The second prototype created the Dukatons in a much less energy-consumptive manner. Although, in this instance, the Dukatons were built based on a trusted third party that published them, instead of Bitcoin. This party would receive all the Dukatons, while the parties validating the transactions to be put into blockchain would only get a transaction fee.
The third prototype involved a centrally designed Dukaton, excepting the Bitcoin software but with a self-constructed electronic wallet, that kept the required cryptographic keys for security. In the result, this prototype served as a base for the fourth prototype to analyze the profitability of DLT for financial market infrastructure.
These prototypes show that the blockchain solutions tested currently cannot meet the high demands of financial market infrastructures (FMI). Requirements for FMIs are safety, reliability, efficiency, payment finality (legal security), authorization, resilience, availability, capacity, scalability, costs and sustainability.
Dutch National Bank,
Finally, DNB claimed that the blockchain technology is exciting and promising. DNB will keep on investing in the technology to use its full potential.