The Bank of Korea is considering the creation of a ‘supernode’ to help mitigate privacy concerns should it seek to adopt distributed ledger technology.
Published as part of an overview of the central bank’s future plans, the report titled “Present Status and Key Issues of Distributed Ledger Technology” further details policy issues that it believes could hinder the growth of distributed ledgers.
Notably, in a section titled “Application Plan”, the report’s authors include several “solutions” to four key problems recommended by the Bank of Korea, headquartered in Seoul, South Korea.
sSpecifically, the application plan advocates for a “supernode” or central manager that oversees privacy controls by helping protect information about the trading partners recorded on the blockchain.
The Bank of Korea proposes that the supernode would also be responsible for issuing tokens and granting participants (or “token users”) access to the shared ledger, and calls for a Merkle root-based implementation of a public blockchain capable of conducting 3,000 transactions per second.
From the report:
“In order to utilize distributed ledger technology in financial services, it is necessary to resolve technical issues such as securing trade secrets, controlling authority, maintaining trust and security and securing scalability.”
If implemented, the report also concludes that a blockchain implementation could save the bank 16% of its total costs, or about ₩107.7bn, a figured based on previous research by Goldman Sachs.
The joint research report was created with the assistance of blockchain firm Coinplug, academics and financial technology “experts” according to the press release.
Data for the report was collected from April 2016 to October 2016.
New momentum
The publication is also notable as it signals another strong sign of support for the emerging technology in Asia.
Earlier this month, 27 financial firms formed the Korean Blockchain Consortium, wrapping up a year in which the nation hosted a debate on the future of bitcoin regulation and saw the creation of a blockchain-powered private market by The Korean Exchange.
Correction: An earlier version of the Bank of Korea report referred to Shinhan Bank in an instance that should have cited Bank of Korea. This was based on an incorrect translation provided, and the article has been updated and a new version of the report has been uploaded below to reflect the new information.
The new Bank of Korea report can be read below:
Bank of Korea Joint Research Paper by CoinDesk on Scribd
Bank of Korea image via Shutterstock