A recent paper published on the Bank for International Settlements (BIS) website highlights the risks that banks encounter when dealing with public blockchain networks like Ethereum.
What is a public blockchain network?
Public blockchains, also known as permissionless blockchains, are networks where users can participate in the consensus process used to validate transactions and data. As opposed to them, there are permissioned blockchains or private blockchains, such as Ripple.
Potential mitigants of risks
To counteract the challenges associated with using public blockchain networks in the banking sector, the paper highlights several potential measures, including business continuity planning and technology-driven transaction controls. For example, business continuity planning might involve an off-chain registry that can be used to recover assets in times of crisis.
Conclusion from the authors
The authors conclude that although technology solutions to mitigate risks are still under development, rapid progress may lead to new solutions that require further research.
The paper emphasizes the importance of developing technological solutions to mitigate risks and calls for further research and testing of the proposed measures.
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