The Central Bank of Brazil is building with just about every blockchain it can get its hands on.
In a new interview about its plans for the nascent technology, members of the central bank's blockchain team revealed they are resuming work with R3's Corda distributed ledger platform, months after ceasing development because the technology was deemed too "immature."
After the enterprise blockchain consortium launched version 1.0 of Corda in October, the central bank said it's ready to see if the newest version has what it takes to back up aspects of the country's financial infrastructure.
The PoCs broadly focus on using blockchain to both back-up the central bank's current real-time gross settlement system (RTGS), called the Brazilian Payment System, as well as better align the organization with the growing momentum for central banks to innovate using blockchain technology.
Speaking to that trend, the deputy head of the central bank's IT department, Aristides Andrade Cavalcante Neto, told CoinDesk:
While the blockchain team at Brazil's central bank had considered a number of use cases – including enabling foreign trade in local currencies and an identity management system – as far back as January, it ultimately selected RTGS as its focus, according to the team's analyst Jose Deodoro De Oliveira Filho.
Instead of being netted periodically, RTGS is used to allow banks to settle their large-value debits immediately as they occur. Because these transactions are relatively infrequent, they have been identified by multiple central banks as a potential use case for blockchain.
Banco Central do Brasil processes 314,ooo transactions per day, moving a total of 839 billion Brazilian reals, or about $255 billion by today's exchange rate.
Talking to CoinDesk, De Oliveira elaborated on the decision to focus on the RTGS use case, stating that while the central bank's current system has been helping commercial banks reconcile accounts for 15 years, they still don't have a backup system. And they're interested in whether a blockchain it suitable for the job.
According to De Oliveira, each of the platforms has its own "advantages and problems," but really only two main obstacles – albeit big ones – remain.
Specifically, the central bank can't "prove" that implementing a blockchain system would be cheaper than implementing something more traditional, he said. And there are ongoing questions about the privacy of using a shared, distributed ledger.
"If you want privacy you can't have the other features, and if you want the other features, you can't have privacy. So, that's what we're trying to solve right now," De Oliveira said.
Out in the open
But while RTGS is the primary focus of the central bank's blockchain work, it's also testing a blockchain-based "information exchange."
Revealed for the first time to CoinDesk, the exchange, called Know Your Citizen (seemingly a play on the regulator-mandated know-your-customer compliance), is powered by Quorom in Microsoft's Azure cloud. It also uses Truffle, a popular ethereum development framework, to interact with smart contracts.
Details about the project are "kind of a secret right now," according to De Oliveira, but he said more information should be forthcoming in the "next couple of months."
Elsewhere, the central bank is increasingly open regarding its blockchain development.
Not only did it introduce its findings at the Central Bank Summit hosted by Ripple in New York last month, but also it has also presented its work to the International Monetary Fund, and will, later this month, appear at Blockchain Summit 2017 in Sao Paulo, Brazil.
As other central banks from all around the world, including Hong Kong, Japan, Canada and Europe, are typically in attendance at these events, Cavalcante Neto framed this openness as a way to workshop ideas with peers, saying:
Brazilian real image via Shutterstock
The leader in news and information on cryptocurrency, digital assets and the future of money, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups. As part of their compensation, certain CoinDesk employees, including editorial employees, may receive exposure to DCG equity in the form of stock appreciation rights, which vest over a multi-year period. CoinDesk journalists are not allowed to purchase stock outright in DCG.