- mBridge, a key player in cross-border CBDC payments, now employs China’s homegrown Dashing Protocol, potentially elevating efficiency.
- This could challenge SWIFT’s dominance and change the landscape of international digital currency transactions.
Dashing Towards a New Future in CBDC Payments
The mBridge initiative, envisioned as a linchpin for cross-border CBDC transactions, is gearing up for its production phase next year. Destined to facilitate payments via wholesale central bank digital currencies (CBDC) from nations such as Thailand, Hong Kong, China, and the UAE, it’s poised to challenge the reign of SWIFT in cross-border payments.
The Evolution of mBridge’s Blockchain Framework
China, among the collaborating nations, holds a technological mantle in this endeavor. Recent revelations from Chinese media highlighted that mBridge’s consensus protocol underwent a transition, adopting the indigenous Dashing Protocol.
Initially, the mBridge architecture, while unique, incorporated elements from prominent technologies. This included Ethereum‘s Solidity for smart contracts and its Virtual Machine. The erstwhile consensus protocol, HotStuff+, was in use, but the prospect of integrating a more advanced mechanism, Dashing, loomed large. That potentiality is now a reality.
Dashing Protocol, tailored for permissioned blockchains, claims a tenfold efficiency surge, as showcased in a 91-node test. This revelation piqued the interest of the central banks of Sweden and France, who are closely monitoring the mBridge project. Beyond mBridge, Dashing is also the backbone of the central bank’s blockchain trade finance network.
The inception of this protocol is credited to a collaboration between China’s Central Bank Digital Currency Research Institute and esteemed academic institutions, including Tsinghua University.
Deciphering the Dashing Protocol’s Potential
The ‘Blockchain Trilemma’ is a concept that blockchain enthusiasts often grapple with. It posits a trade-off between decentralization, security, and scalability in blockchain systems. Boosting one attribute often compromises another. The question is, does Dashing Protocol redefine this equilibrium?
Dashing promises heightened scalability and minimized latency without skimping on security. The Chinese discourse pivots from the traditional trilemma, suggesting that Dashing offers a quad-faceted solution encompassing high security, scalability, throughput, and low latency.
The secret sauce? Dashing’s approach to consensus cryptography. While robust security certificates often dampen performance, Dashing employs weaker certificates for improved efficiency, resorting to strong ones when necessary. This balance aims to maintain security without sacrificing speed.
Furthermore, in the world of blockchain, there’s an ever-present threat of 51% attacks, where a single entity could manipulate more than half of the validators. Ethereum staking, for instance, necessitates a substantial quorum of over two-thirds. Dashing’s adaptability shines here too, allowing a minimal quorum in certain scenarios but mandating a robust quorum for pivotal decisions.
While the technological prowess of the Dashing Protocol beckons attention, its real-world acceptance hinges on trust. As echoed by a US Federal Reserve Governor, the comfort of global central banks in adopting an avant-garde protocol over a tried-and-tested one remains to be seen.
