South Africa Is Testing a Banking Platform for Crypto Tokens

South Africa's Central Bank has recently found success in running Project Khokha, a pilot program in which they tokenized the South African rand and successfully carried out interbank transactions using ConsenSys as the payment platform. Quorum, a private blockchain, was used to convert the currency to digital form and a digital ledger technology was used to distribute the tokens. The aim of Project Khokha was to show that this program was ultimately feasible as a transaction system. Basically, they wanted to bring the idea to life. Seven South African banks took part in the trial, with the support of PricewaterhouseCoopers Inc and with the technical support of the aforementioned blockchain platform, ConsenSys. They also explored the issues concerning interconnection, like its scalability (whether it can be applied efficiently on a larger scale), its resilience (whether it can withstand the constant brunt of transactions), confidentiality (possibly involving encryption and protecting the information of those involved in transactions), and finality (or ability of a payment to be reversed to nulled). Each bank was responsible for putting together its own branch on the network, and would create blockchain tokens to be used as assets as opposed to using other methods of payment. The version of Quorum, which is Ethereum-based, used a consensus mechanism (utilized in blockchain systems to achieve a single data value among distributed processes) that is from Istanbul--a Byzantine Fault Tolerance. They also tested two encryption methods, including Pedersen commitments and range proofs. South Africa's central bank has never used Quorum prior to this pilot program, it claimed--specifically, with using the Istanbul Byzantine Fault Tolerance. The two encryption methods protect the balances of parties involved; the central bank would have to have a decryption key in able to liquidate assets and to exercise some form of oversight to ensure regulations are followed and enforced, if needed. South Africa's Real Time Gross Settlement System handles all the internal transactions using central bank money, and it operates in real time, every second of every day. Project Khokha proved it was able to process many sizable transaction payments within a given period of time, though the central bank stated that cryptocurrencies are technically not "money" and are only "cyber-tokens. Despite this, the central bank put in place an organization to regulate this industry, to ensure it takes its time to develop.