South African banks are collaborating to develop a sovereign blockchain for the country.
“Blockchains require a fundamental shift in paradigm,” the blockchain lead for RMB and chair of the South African Financial Blockchain Consortium, Farzam Ehsani, told MyBroadband.
Ehsani said that blockchain technology requires widespread adoption, which means collaboration is needed for it to be deployed across a wide range of ecosystems.
It also requires that players agree on a particular protocol or standard.
“Consider fax machines or telephones – without a particular protocol or standard that allowed these devices to communicate with one another, they wouldn’t be very helpful,” said Ehsani.
“Blockchains are similar. They require all the participants in the network to agree on how to agree.”
To help make this happen, Ehsani said spaces for consultation and learning have been created to explore the benefits of the technology.
The South African Financial Blockchain Consortium’s experiment is called Springblock, and its members include 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, said Ehsani.
Ehsani said that in addition to experimenting with blockchain technology, the consortium is looking at the digital assets it enables.
“We are exploring all aspects of what this technology can offer to better serve all South Africans,” he said.
Blockchains promise lower costs and higher efficiency in the finance sector, and Ehsani said average South Africans should expect financial services to become better, cheaper, and more inclusive of larger parts of the population.
“Just as the Internet opened up new worlds for the transfer of information, blockchains will open up new worlds for the transfer of value,” said Ehsani.
“However, it is important to note that this technology is still nascent and will take some time to come to full fruition.”