Dutch Central Bank says blockchain technology too slow for payments

Thursday 7 June 2018 14:48 CET | News

Coindesk: The Dutch Central Bank has released a blog post saying that, at the moment, blockchain technology is not beneficial to the payment system in the Netherlands.

De Nederlandsche Bank (DNB) said that distributed ledger technology (DLT) is not suitable for its existing financial payment infrastructure because of DLT’s insufficient ability to scale for large volumes of transactions and other issues.

The DNB came to this conclusion after reviewing results from their project Dukaton, which conducted a series of experiments that has tested four DLT prototypes over the past three years.

Dukaton set out to conduct research in a bid to understand how much value the nascent technology can bring to the countrys existing payment system. Basing its first prototype on the source code of the bitcoin blockchain, the team applied different consensus algorithms and validation mechanisms in later stages.

Following the tests, the central bank acknowledges that blockchain can increase the resilience of financial infrastructure against external attacks, however, this benefit comes at the expense of scalability, capacity and efficiency, it says.

The bank will still consider blockchain technology, especially improvements in algorithms that would allow faster payments processing speeds. 

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Keywords: Dutch Central Bank, blockchain technology, DLT payments, blockchain payments
Countries: World