Security and speed are great advantages but not when they come at the costs of scale, capacity, energy use and availability.
Hear this from someone who has tried and counted both the upside and downside of current Blockchain solutions in a banking and financial-industry context – De Nederlandsche Bank (DNB) and what it did with its project Dukaton.
Through the four prototypes with Distributed Ledger Technology (DLT) that it assessed over the past three years, it tested a lot of factors crucial in a financial infrastructure-setting – safety, reliability, efficiency, payment finality (legal security), authorisation, resilience, availability, capacity, scalability, costs and sustainability.
To start with, resilience against outside attacks is a great plus with a thing like Blockchain, but there are a host of pot-holes here. DNB’s experiments with this technology show shortcomings such as inadequate capacity, inefficiency due to high energy consumption and lack of complete certainty about having paid a payment.
When compared with current payment systems too; the new models (it appears) did not turn out as efficient, could not handle equally-large volumes and were not at par in providing the legal certainty of having paid. Consensus algorithms faltered on goals of 100 per cent certainty, which is a vital factor in financial payments.
Of course, the future can sort out these issues and the bank is exploring more algorithms, applications and innovations ahead, but for now; as DNB concludes in its blog-post – for the time being blockchain technology cannot meet the very high demands of a financial market infrastructure.