aelf supports CBDC’s in a practical manner
The aelf solution provides CBDCs with a practical platform mitigating many of the foreseen challenges
Amid the global pandemic, many countries are revising their legislation, financial systems and regulations. There has been a mass awakening that the current systems, which have functioned with seeming effectiveness, are no longer providing the same security or structural support they once could.
In 2019 the Latin America Centre of monetary studies CEMLA released a paper put together by the Central Bank Digital Currencies Working Group outlining the key aspects around CBDCs. They compare digital currencies against other forms of money showing the clear advantages.
The paper goes on to outline challenges and risks involved in implementing a nation-wide CBDC. Some key risks include:
- Heavy investment to setup infrastructure and integrate existing systems
- Undesired Anonymity in user transactions
- Lack of market expertise within the banking sector
- Heavy reliance on telecom infrastructure and software
The challenges defined above can be addressed when looking at the aelf enterprise solution, specifically focusing on the unique technological components including parallel processing, modular design, cross-chain transfer protocol (CCTP), and multi-sidechain structures.
Infrastructure investment & market expertise
There is no denying that the cost of setting up a new blockchain infrastructure or integrating an existing one with the technology is potentially quite high. Much of this cost can be mitigated with the existence of a well designed and easy to implement blockchain. The aelf team designed their system with a specific modular design allowing the setup and deployment of a blockchain within 10 minutes.
Furthermore, the design allows organizations to adjust and customize their blockchain with minimal effort or technical knowledge by selecting individual modules to change. Together with aelf’s commitment to supporting partners and organizations who wish to build on aelf, the majority of the initial costs can be minimized to a fraction of what other blockchain solutions would require.
Another component to this cost is the difficulty in integrating with existing solutions. Aelf has partnered with Chainlink to allow the onboarding of external data to be completed in a secure and efficient manner with the simple integration of an API. The team has also developed the Cross-Chain Transfer Protocol (CCTP) which seamlessly allows the interaction of assets from other platforms, chains or solutions with the aelf ecosystem. Together these components simply the integration of aelf onto any existing solution to a quick and cost-effective setup.
This point is controversial in almost any technical circle within the industry. Many argue the ability to remain anonymous while completed financial transactions is a benefit and indeed a right every user should have. However this poses serious concerns for regulatory and law enforcement bodies in relation to criminal activity, money laundering and black market transactions. Banks are governed by ‘Anti-Money Laundering’ (AML) and ‘Know Your Customer’ (KYC) laws and pay heavy penalties should they circumvent them, either consciously or subconsciously.
Aelf has understood this dilemma and others when dealing with a business solution while also appealing to the end user, and knows many different applications will have different requirements. The ‘one application to one chain’ solution allows each side-chain to be designed with a specific focus for each application’s requirements. Looking at this further, each side chain has the ability to branch off into multiple parent-child chains. This means within an application, such as a CBDC, there can be components which have full anonymity, while other components comply with AML & KYC laws. It also provides organizations with better control over their solutions without requiring third-party acknowledgements or agreements.
Reliance on existing infrastructure
This is a tricky challenge for any blockchain firm to address. This one can never fully be resolved without the cooperation of all contributing parties (Telecoms, electrical, etc). The aelf solution does reduce the demand and potential for overload with a novel parallel processing design. This design incorporates two elements to produce an incredibly high performance that is theoretically 5 times higher than current visa systems.
One limitation with current node infrastructure is the bottleneck created by the weakest computer within the node ecosystem. The whole system’s performance is essentially only as strong as its ‘weakest link’. By developing a cluster node solution, each node is composed of multiple devices meaning reliance on any individual computer is removed, and as such there is no bottleneck from the ‘weakest link’.
Separation of database recording and transaction processing
When developing the cluster node solution, a new challenge found by the team was another bottleneck. This time in either the transacting or database recording component of block production. By separating these two components to be processed by separate clusters, their performance can be adjusted to meet existing needs while maintaining efficient use of resources.
Through these and other unique development features, the aelf Enterprise Blockchain can meet requirements of many applications including CBDCs by reducing potential challenges significantly compared with other blockchain solutions. The solution provides control, customization, ease of use, low cost and efficiency benefits in a high powered blockchain ecosystem.
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