Why the Reserve Bank chose ConsenSys for its Ethereum project

The South African Reserve Bank selected Quorum from ConsenSys for its Project Khokha blockchain proof-of-concept to speed up development, the central bank said in a report about the initiative.

This follows a presentation from the SARB in which it detailed the success it achieved with the project in the past four months.

Project Khokha used the Ethereum-based platform that ConsenSys developed to test whether real-time gross settlements for interbank payments between financial institutions could be implemented as a distributed ledger system.

Currently, the SARB runs a system called the South African Multiple Option Settlement system to perform real-time gross settlements between local banks.

In its report on Project Khokha, the SARB said the purpose of the project was not to compare various distributed ledger technologies.

Instead, it wanted to create a proof-of-concept that explored the applicability of blockchains in the gross settlement space, while building on the global body of knowledge.

“The selection of Quorum was pragmatic to enable the project to mobilise rapidly,” said an SARB spokesperson.

“A number of other central banks have used Quorum, and as such it was a pragmatic choice, particularly given ConsenSys’s technical skills and experience from working on Project Ubin.”

Project Ubin was a similar proof-of-concept undertaken by the Monetary Authority of Singapore.

ConsenSys and Quorum

“The choice of ConsenSys and Quorum was brought about through collaborative discussion with, for instance, MAS, as well as through the monitoring of what other central banks have done and collaborative learning through participation in international bodies,” said the SARB.

It went on to highlight three key pillars of Quorum which were taken into consideration before choosing the technology:

  1. Privacy and Transparency – Both transaction-level privacy and network-wide transparency are supported. For Project Khokha, Whisper peer-to-peer messaging, Pedersen commitments, and range proofs were the mechanisms used to enable privacy.
  2. Performance and Throughput – Quorum has been designed to achieve realistic throughputs associated with the financial services industry. This is partially enabled by including options for consensus mechanisms. The mechanism used in Project Khokha was Istanbul Byzantine Fault Tolerance (IBFT).
  3. Permission and Governance – Quorum supports blockchains around permissioned groups of participants, with transaction validation and block creation distributed throughout the network.

Now read: How to stay within the law and buy Bitcoin in South Africa

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Why the Reserve Bank chose ConsenSys for its Ethereum project