Although blockchain technology has caught the fancy of many banks and financial Institutions around the globe, there are others who are trying it for quite some time but still to see credible results. The Central Bank of Netherland has revealed that it has been experimenting with blockchain technology for 3 years now, but results are not very encouraging. Revealing the details about experimentation with blockchain, the bank said that in the last three years, it has developed and evaluated four different prototypes of distributed ledger technology (DLT) for carrying out operations in different domains but unfortunately, the technology was not able to live up to its hype.
The only case scenario where the bank found blockchain useful is in the domain of cross border payments. The efficiency and speed of operation come handy with the use of blockchain while sending/receiving the money to/from other countries. In the case of other applications, the bank was unable to find any merit as most of the nations and financial institutions have already got efficient mechanisms in place for the conventional business transactions and money transfers. Use of blockchain amidst these well-built systems and networks didn’t bring any significant benefit for the bank.
The inherent limitations associated with the use of the blockchain such as high power consumption, shortage of capacities, lack of confirming mechanisms, and shortage of skilled manpower are some of the other reasons that further dented the benefits associated with this technology usage. Giving the specific details of experimentation with the blockchain technology, Petra Hielkema who is the director of payments and market Infrastructures at the bank said that the organization started experimenting with blockchain in an incremental manner. It started with very basic steps of understanding blockchain, the cryptocurrency, and the various mechanism and processes associated with these digital technologies. The bank also studied the difference between centralized and decentralized blockchain networks before it went on to develop prototypes for its own business purposes. Despite not getting very positive results from the blockchain adoption, the bank is of viewpoint to continue its experimentation with open ledger technology. Hielkema said that there is no doubt that the blockchain technology is very promising, but it really requires a lot of innovation before it starts showing its full potential.