Just as the Internet opened up new worlds for the transfer of information, blockchain technology will open up new worlds for the transfer of value.
That’s the word from Farzam Ehsani, blockchain lead at RMB and chair of the South African Financial Blockchain Consortium.
South Africa, along with many countries around the world, is exploring the creation of a national “sovereign blockchain” for the financial services industry.
Banks, financial markets, infrastructure players, and other institutions are experimenting with the technology through their participation in the South African Financial Blockchain Consortium.
But with blockchains like Bitcoin, Ethereum, Litecoin, and others already going strong, why develop a sovereign blockchain instead of linking into a technology already supported widely?
Ehsain agreed that it is imperative to look at technologies that are being widely adopted at the global level to inform the work being done at the national level.
However, he said that there are several political and technical reasons to consider a sovereign blockchain.
“The world is not yet ready for a permissioned supranational blockchain run by governments,” Ehsani said.
“Technology is not the impediment here, politics is. The nation-state is the largest organisational unit with a binding rule of law backed by an executive force.”
While humanity has attempted and achieved the unity of the family, tribe, city-state and nation, it has not yet established an international legislature, judiciary and executive force.
Without a community of federated nations, an international regulated blockchain would depend on a a trustless consensus algorithm.
However, some states could collude to bring down another state’s economy by not validating their transactions — an ultimate form of economic sanctions.
Ehsani argued that this would dissuade any government from joining such a supranational network today.
“As such, a sovereign permissioned blockchain remains our focus for now.”
The South African Financial Blockchain Consortium’s experiment is called Springblock.
Its membership comprises major banks like ABSA, FirstRand, Standard Bank, Nedbank, and Capitec, as well as the alternative stock exchange ZAR X.
The Financial Services Board and South African Reserve Bank are observer members.
Repositories hosted on Github suggest that the consortium has been exploring Ethereum, Hyperledger, Chain Core, Corda, and JP Morgan’s Quorum blockchain.
Each repository has its own set of contributing developers, but the Github organisation is administered by Coenie Beyers – a software engineer who left FirstRand to join the US-based blockchain software company ConsenSys.
Ehsani said the consortium is not only looking into blockchain technology, but also the cryptocurrencies it enables.
“Blockchains enable ‘crypto instruments’ or ‘crypto assets’, which include ‘cryptocurrencies’. As such, we are exploring all aspects of what this technology can offer to better serve all South Africans,” said Ehsani.
Blockchain technology holds the promise of revolutionising banking and the rest of the financial sector.
“From lower costs to higher efficiency, the average South African should expect financial services to become better, cheaper, and more inclusive of larger parts of the population,” said Ehsani.
However, he cautioned that these benefits won’t be realised overnight.
“This technology is still nascent and will take some time to come to full fruition,” Ehsani said.