Bank of England Announces Proof of Concept for Private Blockchain

Bank of England private blockchain proof of concept

The Bank of England has become the latest central bank to announce a proof of concept, according to details released by the bank today.

The U.K.’s central bank, the Bank of England has said it is developing a blockchain that allows for a high degree of privacy, while still allowing regulatory oversight and access, after examining how this type of blockchain network could be developed.

Working in partnership with blockchain startup Chain, the bank released details of its plans in a paper earlier today, which set out its aims and objectives.

In particular, the bank hopes to create a “distributed ledger system in such a way that transactions remain private whilst keeping all data shared across the network, and at the same time maintaining a regulatory view of all transactions.”

The proof of concept is being developed as an academic rather than practical model. Nevertheless, it continues the trend of Bank of England blockchain projects, which to date have focused on evolving existing functions, without hiding transactional data.

However, the bank did recognize there could be trade-offs in developing this type of system, and the proof of concept will aim to examine these factors.

“The trade-offs would still need to be further explored, especially with respect to scalability, speed of transaction processing and risks around the security of the cryptographic techniques employed.”

Scalability looks to be the main issue the bank will need to resolve, in order to practically use this type of solution in future. It remains to be seen whether the proof of concept will shed any further light on these objectives.

The news comes off the back of the announcement days ago that the Bank of England was developing blockchain technology for real-time gross settlement, and comes as the latest in a series of moves toward blockchain development from the central bank.

It comes at the same time as central banks, companies and governments worldwide are turning an increasing focus to developing blockchain technologies.