According to an official familiar with LINE, the company has recently advanced its own blockchain platform and started a CBDC development support project.
October 20, 2020 | AtoZ Markets – It turns out that LINE, which develops social networking services, will support the development of the Central Bank Digital Currency (CBDC). The move was revealed in an exclusive interview article published by the major Korean media Chosun Ilbo.
This is the world’s first case of a major non-financial company embarking on support for CBDC development.
LINE aims to support “customized CBDC”
LINE aims to support the development of a “‘customized CBDC” in a format that reflects the requirements of central banks in each country while maintaining the advantages of its own blockchain platform, such as scalability and stability. Currently, the firm is discussing the application of blockchain platform technology with central banks in major Asian countries. LINE already has plans to expand into the world starting with Asia.
LINE officials pointed out:
“It is difficult to disclose the exact country where the discussion is taking place,” and “It is a major Asian country focusing on the development of CBDC for micropayment.”
LINE will become an oasis’ in the micropayment CBDC system
Line’s move was promoted as the world’s central banks struggled to issue CBDCs based on distributed ledger technology. World central banks such as the United States and Europe are competing for the supremacy of the CBDC, led by China, which started the fastest CBDC pilot operation.
CBDC is largely divided into large payments and micro payments. Switzerland, Canada, and France are insisting on the’direct operation method’ and are studying the introduction of CBDC for large payments.
Countries that introduce CBDC for micropayments, such as the UK, Norway, and the Bahamas, have in mind the indirect operation method (a method in which the central bank manages the CBDC of individual customers by financial institutions and payment service providers).
The problem is that central banks developing CBDCs for micropayments based on distributed ledger technology are struggling to develop. These banks are currently conducting pilot operation and research with blockchain platforms such as Hyperledger Fabric, R3 Coda, JPMorgan Quorum, and Ethereum. However, they agree that it is not yet at a level to replace the existing payment. It is evaluated that the stability, speed, scalability, personal information protection, and system resilience are not excellent enough to handle micropayments in the private sector.
According to a report on CBDC released by the International Settlement Bank in March, it was pointed out that limited payment throughput, slow payment processing speed, and transaction stability were pointed out due to the CBDC vulnerability based on distributed ledger technology. The report said:
“CBDC based on distributed ledger technology has a limited amount of transactions that can be processed. Therefore, it is difficult to pay for routine micropayments.”
Under these circumstances, Line’s support for CBDC development is expected to become an oasis for these central banks. LINE has experience in retail services such as messenger and pay business, as well as blockchain business experience such as issuing own tokens and operating blockchain platforms. In particular, regarding blockchain operation, it is evaluated that it has solved the problems of stability, speed, and scalability through continuous technological advancement. This is why some central banks, which must create synergy by using private micropayments and distributed ledger technology together, are inevitably welcomed.
Think we missed something? Let us know in the comment section below.