Britain’s Central Bank, the Bank of England (BoE) has recently published a Proof of Concept (PoC) which explores the potential possibilities of allowing users to share their data over a secure network. Teaming up with blockchain infrastructure provider Chain, they have examined several issues surrounding privacy and data sharing, and have put forward plans for a solution.
Fintech PoC
The development of such a system has not yet been implemented practically, but both the BoE and Chain have tried to answer questions that arise from the development of a distributed network system. For example, by allowing participants from around the world to share information on a blockchain network, raises a number of privacy concerns. In these cases, and even with the use of cryptography to secure the network, it is possible for individuals to find ways to access the transactional data of other users. The BoE used a centralised authority and a regulator as examples of users and explained that any transfer of data and assets would have to be concealed from other network users. In addition, it would have to be certain that those who are involved in the consensus process would not have full visibility of transaction details.
The use of cryptography and encryption techniques does not always guarantee full security from an attacker. One such way of avoiding a breach would include creating a partially distributed network where information is only shared between those that are directly involved in each transaction. This, however, would have a knock-on effect on resilience and would actually work against the idea of a distributed system.
The BoE stated that the ideal scenario that would increase privacy amongst its users whilst still allowing the sharing of data across a network. Whilst this idea is still in the early stages, it is theoretically possible.
Fintech Accelerator
In 2016 the BoE launched a programme known as the “Fintech Accelerator” which aimed to provide solutions to issues that are faced by central banks when they team up with fintech companies. This particular PoC is amongst 12 others that are published on the bank’s website. The BoE has previously teamed up with fintech companies such as Enforcd, MindBridge Analytics Inc, PwC, Ripple, and BitSight.
Although blockchain initiatives are welcomed by the BoE, cryptocurrency still has a long way to go and the Governor of the bank, Mark Carney stated at the Scottish Economics conference, that cryptocurrencies are failing.
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