Innovating Infrastructure Finance Through Blockchain
By Lee Hong-kyu, Lead of LINE Blockchain Lab
Bitcoin, the original peer-to-peer technology-based cryptocurrency, has gone through numerous challenges since it was created in 2008, and proven its long-term value as growth asset. Similarly, Ethereum has built its solid reputation as a decentralized software platform based on blockchain and smart contracts by presenting an ICO (Initial Coin Offering), DeFi (Decentralized Finance), and NFT (Non-Fungible Token).
For the past four years, people in the blockchain industry have tried hard to lower the high barriers to entry for general users and maximize the technology’s popularity. To overcome the current impracticality of blockchain and encourage more real-world usability, LINE Blockchain has focused on constructing a platform and developing related services that truly are “Designed for everyone.”
One of big steps needed to popularize blockchain is the ability to apply that technology to existing industries, first and foremost the financial industry.
Throughout the internet and mobile era, many changes have occurred in various industries, such as commerce and advertising, but the financial industry has not changed much. However, blockchain technologies like DeFi, the tokenization of securities, and CBDC (Central Bank Digital Currency) are making progress and leading to a transformation of the financial sector.
A number of central banks conducted research and pilot programs relevant to CBDC up until 2019, mostly related to bank-to-business payments and funds transfers, called Wholesale CBDC.
Since 2020, however, the focus has moved past Wholesale CBDC, with many countries now exploring the construction of entirely new systems to completely replace cash, an approach called Retail CBDC.
As a result, many countries have been able to define exactly the technical and legal requirements for Retail CBDC, as well as the common technical factors. The technical features below are defined as critical and required for CBDCs.
The technical features below are defined as critical and required for CBDCs:
▲ Technology with finality that the transaction cannot be restored or reverted in a short period of time.
▲ Technology with high stability against external attacks.
▲ Technology with high scalability to cover all cash flows.
▲ Technology with guaranteed privacy, at the same level provided by cash.
▲ Highly resilient technology without a single failure point that never halts for 24 hours.
The development of decentralization-focused blockchain technology has so far focused on liveness rather than finality. Which is why there has been a lack of research on techniques that meet the standards of all three features: performance, privacy, and scalability.
However, LINE undertook the challenge of developing a platform that worked for finance while also implementing a technology that could satisfy all three functions mentioned above, creating the foundation for a system that can provide each country the secure blockchain platform needed to operate state-issued digital currency.
We now hope to deliver more interesting news on LINE Blockchain Mainnet, platform services and more in the second half of this year.
Source: The Korea Economic Daily(Hankyung) Koala Newsletter
Read Original: https://www.hankyung.com/economy/article/202105319002i