With central banks globally racing to establish their central bank’s digital currencies (CBDC), Cambodia has launched its own blockchain-based digital payment system called “Bakong.”
Bakong system to promote faster and cashless payments
Bakong is a platform through which microfinance institutions and banks can carry out transactions in a decentralized way. According to the National Bank of Cambodia, the system allows peer-to-peer transactions within the same institution or other institutions. Interestingly users can conduct transactions between Bakong accounts or by the use of traditional bank accounts.
The project was developed by the central bank in collaboration with other entities. It first secured involvement from financial giant PRASAC in October last year. At the beginning of this year, the National Bank of Cambodia described the system’s launch, which it revealed to be a closed-circuit enterprise.
PRASAC’s executive VP Sony Say said that Bakong is a new and innovative payment system that permits users to carry interbank transactions and make payments of bills easier. It is secure, and transactions are free with payment transactions made in real-time and settled within five seconds. This platform seeks to promote cashless transactions and financial inclusion in Cambodia while at the same time cutting costs and time taken to process transactions between banks.
Bakong system runs on secure Hyperledger Iroha blockchain
The system will utilize Hyperledger Iroha, a permission-based blockchain network to ensure the transactions’ transparency and security. Since the system is built I Hyperledger Iroha blockchain enhances transaction privacy and finality. There is the transparency of transactions to validating nodes run by the central bank without disclosing parties involved in the transaction.
Chea Serey, the General Director of the National Bank of Cambodia, said that they are optimistic that the Bakong System launch will promote social welfare. It also seeks to provide seamless peer-to-peer payments in the wake of the coronavirus. Serey said that users can make online payments through the system that offers alternatives for the transaction, such as sending and receiving money through e-wallets.