The South African Reserve Bank (SARB) has concluded a 14-week blockchain proof of concept trial for an interbank clearance and settlement system. Named Project Khokha, the blockchain solution is built on Quorum, an Ethereum-based enterprise blockchain platform created by investment bank JPMorgan.
The blockchain proof of concept was performed in partnership with some South African banks, namely Discovery Bank, Capitec, First Rand, Absa, Investec, Nedbank, and Standard Bank.
"Project Khokha is a proof of concept designed to simulate a ‘real-world’ trial distributed ledger technology (DLT)-based wholesale payment system. The project focused on providing participants practical experience on aspects of using DLT in a realistic test environment where different deployment models were utilized. show that daily volume of the South African payments system could be processed in less than two hours with full confidentiality of transactions and settlement finality. Transactions were processed within two seconds, across a network of geographically distributed nodes, with distributed consensus providing the requisite resilience. The SARB was able to view the all the transactions to allow for regulatory oversight," said the SARB in a statement.
SARB also worked with ConsenSys, and Ethereum technology company, as well as consulting company, PwC. Furthermore, the central bank reported that the project was built using Istanbul Byzantine Fault Tolerance (IBFT), Pedersen commitments and range proofs. This, according to SARB. is the first time that a proof of concept (PoC) has used Pedersen commitments and range proofs on a Quorum network using IBFT.
"This project has laid the foundations for future collaborative work – essential in the blockchain context – and has fulfilled its objective of providing useful insights to all participants. This report notes that there are to consider before the decision to take a DLT-based system into production can be taken. Some of these issues relate to the practicalities of implementation, but also to legal and regulatory factors economic impact. One objective of Project Khokha is to provide a better understanding of how South African Multiple Option Settlement (SAMOS) system would integrate with a DLT system. The intention is not to consider changing with the SAMOS replacement but to provide input to that project. direction will also be influenced by the further development of the by central banks and other regulators globally continuing to contribute to this field of knowledge. The SARB anticipates continuing work in this area and expects to continue contributing to of work in DLT-based systems."
The SARB has been one of few, if any, central banks in Afrika that have provided guidance on how regulators and policy makers should handle cryptocurrencies instead of banning them as some have proclaimed. Project Khokha is also an indication that not only does the SARB look at cryptovurrencies and the blockchain from a policy making perspective, but it is also willing to explore them as possible solutions to some of their work.