Blockchain Remittances Face Efficiency Hurdle, Says Taiwan Central Bank
Blockchain systems for interbank clearance and remittance may not be as efficient as centralized systems just yet, according to a report released by the Central Bank of Taiwan.
Announced by the bank's new governor Yang Chin-long at a press event Thursday, the report outlined various explorations currently being conducted by the island's central banking authority into financial technology, including a proof-of-concept utilizing distributed ledger in interbank remittance.
Collaborating on the effort are members of academia and the Taiwan Clearing House (TWNCH), an authority that handles financial product settlements among financial institutions, under supervision of the central bank.
Through the proof-of-concept, the central bank said it has simulated a system that uses its own digital currency to make direct payments between banks, and is managed by an Automated Clearing House (ACH) system developed by the TWNCH.
However, the initial results suggest that the distributed system so far does not appear to be as efficient as the existing, centralized ACH system.
While two different tests using the blockchain PoC were able to process 4 and 26 transactions per second, respectively, such speeds are significantly less than the 2,700 transactions per second managed by the ACH system.
Furthermore, the reliability of the blockchain platform could also be an obstacle, the report said:
"In addition, the testing result shows there are problems of confidential information leak and malfunctions in individual nodes."
The central bank said, though, that blockchain technology is still at an early stage and is developing rapidly, and it doubled down on its commitment to widen efforts to conduct more testing with the clearing house and financial institutions. Yang previously promised to boost blockchain adoption in Taiwan during his tenure in his February inauguration speech.
In other news, the Yang remarked Thursday, according to a local report, that bitcoin may be the "biggest bubble in history." He has previously said that cryptocurrencies have diverted from their intended purpose in payments towards becoming a mere tool for speculation.
Taiwan dollar image via Shutterstock