CTO Tomochain Nguyen Sy Thanh Son: Unifying National Financial Data on Blockchain Platform

This is the article of Mr. Nguyen Sy Thanh Son – CTO of Blockchain Platform Tomochain, talking about the consolidation of financial data on the Blockchain platform. This is a utility that promises to change the current bulky banking system entirely.

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Nguyen Sy Thanh Son, CTO TomoChain

Currently, most banks and financial companies have built their own financial databases (Ledger, Core Banking). At the moment, this architecture works quite well. In particular, the most obvious advantage is that the parties are proactive in organizing services on their systems. From there, they create competitive services and promote joint development. However, this design also brings down both economic disadvantages and user experience.

Economically, it is clear that implementing Core Banking will increase the cost of building a system for a financial institution. At the same time, sending money through organizations (for example, interbank deposits) also takes many integrated stages, costly, time and workforce to deploy as well as perform auditing and accounting.
In terms of user experience, the most noticeable drawback is the deposit and withdrawal of money into e-wallets, as well as the costs of inter-bank money transfers.

Obviously, the property of users in e-wallets as well as banks in Vietnam Dong. But because each organization has its own digital asset database, it is difficult to transfer money between the parties.

On the scale of a country, all people use the same currency. If the state constructs a digital asset data (also known as a Ledger) with full API / SDK, the protocol for secondary financial institutions (e.g. banks, e-wallets, insurance, securities …) can easily deploy services on it, the above difficulties seem to be removed. This is considered a new approach that is bringing many significant changes.

Blockchain technology can help us implement such a system. We can temporarily call the national financial data consolidation (NTHDLTC) on the Blockchain platform. The State Bank will be in charge of operating the Blockchain Master Nodes and issuing Vietnam Dong digital currency on it. Secondary financial institutions have the right to run nodes and use the API / SDK to retrieve balances and program their services on (this is the construction of smart contracts on the Blockchain platform).

In order to implement the mathematical representation system, it is necessary to work in parallel with the development of national population data, identification and authentication protocols. Regarding residents’ data, Minister of Information and Communications Nguyen Manh Hung announced that by 2020, it would be basically completed. For the identity and authentication protocol, there is nothing new. Facebook, Twitter, Zalo have been able to manage billions of accounts and provide API / SDK adequately for third parties to exploit that data. Basically, identifiers that can use the main technologies are digital signatures, eKYC, and OAUTH2 protocols.

However, the implementation of the new model will need to adapt to the old one. Just like when telecommunication networks deploy new 3G technology, make sure that phones using 2G technology still work. To do that, we need to build transfer ports (Gateway, Bridge) between the old and new systems. This creates a major cost and causes significant obstacles for the implementation of the new model. Especially at present, the system is still working well and no parties have proposed or pressing anything.

There is a similar solution, which implementation may be more accessible. Companies and financial institutions jointly form an alliance using the same Blockchain. In particular, all parties have the right to run the node to participate and a consensus process on Blockchain. This is the solution that Facebook’s Libra is using. However, they also encounter difficulties when trying to conduct it on a global scale.

Blockchain has been an irreplaceable alternative to decentralized financial projects. Bitcoin, Ethereum or TomoChain are all stable decentralized financial platforms that use Blockchain technology. But in recent years, we see that both JP Morgan and Libra have chosen Blockchain technology for their projects. It seems that Blockchain is not only strong in the decentralized financial sector but also wants to show its strength in the centralized financial sector, where many traditional Core Banking products dominate. Why don’t they use the old core banking? It may be simply because it is too bulky, and designed only for a single financial institution. In the new financial model, with the emergence of alliances of organizations sharing the same financial database, Blockchain technology is the right choice.

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