Bank of Canada and blockchain consortium R3 have concluded that their Project Jasper initiative could eventually provide a basis for building cash-based settlements systems.
A joint effort between R3, Payments Canada, the Bank of Canada and others, Project Jasper is a distributed ledger technology (DLT) research project that has been under development since March of last year.
Jasper is a simulated wholesale payment system using a DLT-based settlement asset called CADcoin or settlement coin. The project was set up to see if DLT could meet international standards for banking payments infrastructure, and this is the first time a formal white paper has been produced summarizing the work.
The paper details the mechanics of various experiments undertaken so far, with both both ethereum and R3’s blockchain protocol Corda having been trialed.
Ethereum’s proof-of-work consensus was found to be too risky for banking systems and, while the alternate consensus model used by Corda was an improvement on this, it apparently also failed to meet the necessary “operational risk requirements.”
However, the authors say that while there is “much analysis” still to be completed, Project Jasper could prove to be the “core” for settlement systems based on DLT in future.
The paper states:
“It is also possible that a cash-based settlement-solution system such as Jasper could prove to be the core upon which other distributed ledger platforms can be built to perform tasks such as settlement of financial asset transactions, manage syndicated loans and support trade finance.”
In conclusion, if such a system for payment and settlement could be realized, “there could be significant benefits for the whole financial sector and the economy overall,” it says.
Cog wheels image via Shutterstock