Nxt Foundation Positions Platform to Entirely Replace Legacy Banking Systems
AllCoinsNews had a chance to chat with Nxt marketing lead David Pearce about the Nxt Foundation’s plan to offer blockchain-based systems as a full-on replacement of legacy systems of traditional banks.
ACN: So, you are positioning Nxt as a decentralized financial platform for replacing legacy systems of banks? We are talking about the entire system of a bank right? Not just enable digital asset capability?
Yeah…it’s an insanely ambitious concept. But the more I look into the problems that banks (and other fintech systems) are facing as a result of their legacy issues, the more it makes sense. A blockchain based system could help banks out of this situation by allowing a comparatively simple migration to an open source system that is already proven to be secure and stable. There are several blockchains as well as Nxt that could be considered for this function, but that only Nxt has the depth of mature features that give enough functionality to be a fully fledged banking system replacement. Right now (as a poorly paid employee of Nxt) I manage most of my personal finances with Nxt and BTC, (plus some other cryptos), so I rely on crypto-currency systems. Nxt offers a lot more options than any other system, including the ability to generate a secure verification token, and the ablity to transmit data with my transactions.
ACN: How long would it take to migrate a bank on to the Nxt platform? What would the general steps in this process be like?
Depends on the size of the bank, the chosen configuration, and a lot of other variables. I think that the answer will always be: quite a long time. Banks are conservative, and to them even the idea of data loss is unacceptable, so they will be slow and careful. The most logical way forward is to decide how much functionality will be taken over by the blockchain (for example: currency transfer + storage, account authentication, embedding/storage of data, backup strategy) and how much will be handled by the banks own systems. Then move forward by setting up a blockchain based system in parallel with the legacy system, and very gradually move transactions/accounts over on to the new system. I would think that this process could take years, if done cautiously.
ACN: How many transactions per second can Nxt handle?
Right now, Nxt is restricted by design to 255 tx/block, with one block per minute. This translates as slightly over 4 tx/second. Not enough for a large scale consumer-facing bank, but more than enough for a smaller, private bank. I would expect, in any case, that banks will choose to license and modify Nxt-based technology to use as a private blockchain rather than allowing their entire business to be exposed on an existing public blockchain, so the speed of the current Nxt mainnet isn’t that important.
ACN: There are many companies now marketing private or permission blockchains to banks. Are you offering private implementations of Nxt or will this be on your existing blockchain?
We already have 2 possibilities for customised/semi-private blockchain based solutions: Nxt Assets and the Nxt Monetary System. Both run on the existing blockchain. Nxt is in discussion/development about how to offer private blockchain solutions based on Nxt: this is a feature proposed for sometime in mid-2016, and is currently referred to as ‘White Label’ blockchains.
ACN: What is your view of private blockchains for banking?
Hah….I have 2 views. On the one hand: the blockchain could be a brilliant solution for a lot of the issues that banks face. But the blockchain could also replace banks completely…..it’s a dichotomy, truthfully. I think that we will eventually see a hybrid system: public and private blockchains working together, with some users choosing for banks and others choosing to migrate completely to public crypto-currency systems.
The one negative point that I can see about private blockchains: they take away the element of trustlessness from blockchain tech. A public blockchain is decentralised, and this decentralisation leads to a trustless system : you do not have to place any trust in a third party, only in the software. A private blockchain requires you to trust both the software and the entity that is running it.
ACN: How do you compete for banking business with projects like R3’s blockchain R&D program for 25 banks?
We’re not even trying. We’ve spoken to several banks, but we are not yet aggressively exploring the market. Nxt technology has only existed for 2 years, we are a long way from banking standards yet. But with the development of the ‘White Label’ technology, Nxt is starting to take a close look at banking applications.
ACN: Is Nxt implementing more real use cases other than in Namibia (44Phones) and Agistri, Greece (Drachmae)? And has there been a follow on with these efforts?
Both projects are on-going, but they are both third party projects, with Nxt personnel involved mostly in a technical consulting role. Nxt has no control over these projects at all.
ACN: Also since you have a embedded voting system in Nxt, have you approached governments about using it for elections?
No. I have had contact with a couple of governmental people over the last year, but so far nothing exciting has happened. We have had some very interesting contact with non-governmental, activist organisations, though. The Nxt community has been using the voting feature to decide on aspects of upcoming Nxt features.
ACN: The aims of the Tennessee project are ambitious. The project seeks to transform you marketing strategy by overhauling the Nxt web presence, building a social networking team and a PR firm, increasing the number of Nxt use cases, and encouraging more Nxt-based projects and investors. How are you funding Tennessee and how is the effort going?
Tennessee was funded by donation from the Nxt community. You can see the whole story here: https://nxtforum.org/general-discussion/%28marketing-business-and-development%29-the-tennessee-project-fundraiser/
So far, Tennessee is developing well. We’ve done a lot of ground work on both website and PR, including hiring John McLeod for his media contact skills. We are working with another group on the social networking front, and have just helped with the production and distribution of the latest CORE magazine: http://joom.ag/eugp The most recent project we’ve helped bring on board is Farlaweb, which is slightly controversial. Tennessee only went live at the start of November, so we’re happy with progress so far.