By
Bhushan Akolkar
June 27th, 2024
Some features of Substrate by Polkadot include support for wholesale and retail transactions involving CBDCs.
Nabatech, a Central Bank Digital Currency (CBDC) company, has selected Polkadot’s Substrate framework to host its digital asset platform for central banks and financial institutions. The decision to select Substrate by Polkadot came after a rigorous exercise that encompassed careful analysis and selection process between seven potential blockchains.
Substrate by Polkadot Over Ethereum and Polygon
Nabatech researched a number of blockchains including Ethereum, Hyperledger Fabric, Cosmos, and Polygon before landing on Substrate. Substrate was chosen from the pool on the basis of security, coding language, runtime, sybil resistance, enactment of internal organizational business processes, governance, and interoperability.
According to Nabatech CTO Paz Diamant, “After conducting a deep technical analysis of blockchains with multiple economy and technology experts, we were attracted to Substrate’s flexible and modular design. Its framework can be quickly adjusted to suit any business or technical requirement, flexialy, without compromising on security or scalability.”
It is worth noting that attracting central banks and other financial institutions requires a high level of security and stability. Substrate-based networks receive support from strong cryptography and include sophisticated features to defend against common attack vectors.
Some features of Substrate by Polkadot include support for wholesale and retail transactions involving CBDCs. It also expands to the utilization of a modular structure that gives Central Banks the option to select the solution foundation most suitable for their monetary policy and financial sovereign strategy. Due to Substrate’s flexibility, central banks can start with wholesale and end up with retail CBDCs depending on what they deem fit.
Notably, Nabatech is a joint venture between SICPA and INX. Nabatech falls under the oversight of the US Securities and Exchange Commission (SEC) and Finra. Its new project involves developing a digital asset platform that offers support to central banks seeking tokenization of assets like CBDCs, stablecoins, and digital bonds.
The system is already being used as a sandbox for Central Banks to provide solutions for infrastructure. Beyond this, it also boosts currency supply lifecycle, transfer and settlements, and sovereign compliance optimization. The anticipated longevity of the platform that is under development has significantly influenced Nabatech’s extensive research into blockchain suitability.
The nature of the entities that will be using the platform is equally an influencing factor.
Central Banks Push For Their CBDC
Quite a number of central banks are currently mulling the development of their CBDC. The Republic of Rwanda recently revealed its plans to create its own CBDC within the next two years. The driving force for Rwanda is to improve the country’s financial system. It also plans to offer citizens a safe, free, and convenient alternative to physical cash. Ultimately it hopes to bring more people into the banking system.
Similarly, Ripple CEO Brad Garlinghouse has announced new partnerships with ten governments to develop their CBDCs. These alliances will use Ripple’s secure and efficient blockchain technology to update financial systems around the world.
These separate moves underscore how the world is gradually inching toward financial inclusion.