Blockchain System Inefficient for Payments, Dutch Central Bank Says

Blockchain System Inefficient

Netherlands’ very own De Nederlandsche Bank (DNB) recently concluded that existing financial payment infrastructures do not give Distributed Ledger Technology (DLT) a full nod.

The reason for their conclusion is that the technology is not sufficient to scale for massive volumes of transactions, among many other issues. This was based on their project Dukaton’s findings, which showed that even though blockchain can up the resilience of overall financial infrastructure from external attacks, but this comes with a terrible price: the system will compromise in scalability, capacity, and efficiency.

The Dutch central banking authority said:

“the current payment systems are very efficient, can handle large volumes and provide the legal certainty of payment. The blockchain solutions tested show that they are not sufficiently efficient, with regard to costs and energy consumption, and they can not handle large numbers of transactions.”

That being said, DNB does not see, at least for the time being, a more efficient algorithm being provided for by the blockchain technology which would be able to reach the technological thresholds as mandated by the Dutch banking authority. However, the central bank will still continue to exert efforts to experiment further with blockchain technology, as well as in similar application development.

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