The National Bank of Cambodia revealed the technical details of Project Bakong blockchain-based payments system

As Cambodia inches closer to establishing an upcoming Blockchain-based payment system called Project Bakong this week, available for public use, local users of the U.S. dollar are sharing anxiety about implications for the future value of their imported fiat.

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Project Bakong will help challenge the dollar’s ​​reign by inducing Cambodians to pay

The National Bank of Cambodia has revealed the specifications of an upcoming Blockchain-based payment system called Project Bakong this week. This project has been cherished since 2017. They see this project as a high-tech reform of the Khmer Rie, the official currency of Cambodia.

The central bank said:

“Bakong will help challenge the dollar’s ​​reign by inducing Cambodians to pay instead via QR codes and a mobile app, with a Hyperledger Iroha blockchain facilitating real-time fund transfers between e-wallets plugged into their bank accounts.”

The whitepaper stated:

“That permissioned blockchain will work between Bakong accounts and traditional accounts, record transactions on a distributed ledger, reach consensus via the block voting hash-based Yet Another Consensus algorithm, and process transactions in five seconds or less. Transaction throughput is between 1,000 and 2,000 transactions per second. This suggests that there is potential for this project to scale.”

The bank says its peer-to-peer nature eliminates the inefficiency of central clearing house models without prompting users to pay anything to transact. Because banks and individual users are now included in a DLT platform, both banks and users no longer face connectivity and interoperability issues.

Cambodian officials were hesitant to label the fiat-backed Project Bakong a central bank digital currency (CBDC) in the past. Instead, they call it a blockchain payment system. Users must download Riel to their Bakong account before they can transact with others. That is different from an original digital CBDC.

Nevertheless, white paper frames Bakong is against the development of CBDC projects in highly developed countries around the world. But while the newspaper says such countries can turn to CBDC to address their reduced use of cash, in developing countries, CBDC can promote financial inclusion, improve inefficient payment systems, and even reduce poverty.

Notably, the National Bank of Cambodia is one of the few central banks that have initiatives for future money that truly relies on blockchain. Mass adoption could also give the central bank a higher level of control over Cambodia’s monetary policy by breaking the dollar’s decades-old local holdings. Bank officials are already moving to oust the U.S. dollar: Last month, the central bank announced plans to phase out $ 1, $ 2, and $ 5 banknotes by the end of August.

It is still unclear exactly when Project Bakong will be fully launched. Therefore, we can only wait for the coming future.

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