The Bank of England is exploring the possibility of a private blockchain to keep the privacy of data among users on the network of a distributed ledger, while sharing it across the network, according to a Bank of England release on April 11.
The bank partnered with Chain, a startup that is developing infrastructure protocols, to “get a better academic understanding of how recent innovations in cryptography can ensure privacy in a distributed ledger system, and to consider some of the potential trade-offs that the solutions involved.”
According to the central bank, the best scenario would be 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 bank still considers that futher exploration is needed regarding “respect to scalability, speed of transaction processing and risks around the security of the cryptographic techniques employed.”
Chain’s work is more academic than practical for now, as it is using proof-of-concept.
The two principal objectives the bank is looking for are to :
- “Explore how DLT based systems could be configured to ensure that no party (except for the regulator) was able to infer details about transactions which they were not counterparty to, including ensuring that participants in the consensus process did not have full visibility of transaction details;
- Understand how the choice of privacy solution affected the performance of the system as well as the trade-offs, risks and challenges this presents. “
In the beginning of March, the Bank of England governor called for more cryptocurrency regulations.
On March 28, the Bank of England announced that it was planning to use blockchain technology.