In a bid to be a forerunner in blockchain technology where US government bodies are concerned, the Massachusetts Federal Reserve has announced the trial run of a new blockchain powered supervisor node. The ‘experiment’ has been in development since 2016 and is now ready for real-world testing.
The primary role of the supervisory node will be to monitor financial movements across a large pool of banks and other financial institutions. To begin with, the team will employ a base strategy having the capacity to keep an eye on a wide range of transactions. In the future, however, the established platform will likely host a variety of task-specific nodes.
According to the senior vice president of the Boston Federal Reserve, Jim Cunha, development will focus on blockchains dedicated to holding securities, cash transfer information, derivatives, interbank transfers, and so on.
While it may not be realistic at this point to say blockchain is a technology ready to be wholly-approved by the Federal Reserve, it is clear from Cunha’s comments it is the Federal Reserve’s responsibility to keep up with the evolving financial tech landscape.
According to the Federal Reserve vice president, keeping up with the same types of blockchain developments that the nations largest banks are experimenting with is imperative for the future success of the Reserve.
Cunha admits that the experiment is a large undertaking and will take a considerable amount of time to develop the technology behind the blockchain project fully. The current plan is to set up the groundwork for the platform this summer. Issues like primary direction for the project, goals, and initial applications will all be a part of the first steps.
While the blockchain will not be available publicly for some time, the plan seems promising to say the least.
One of the first things that Cunha’s team plan to work on once the foundation has been set up is a blockchain-powered auditing node. The development team will have to answer questions regarding virtually every aspect of the planned blockchain auditing process. Issues involving types of data accessed, update procedures, analysis methods, and more, will need special attention.
Establishing a Standard
There is an interesting aspect of the Boston Federal Reserve’s blockchain plans to look forward to. The development team is creating a standard that future financial institutions can work under.
Much like the current system governs financial movements under its jurisdiction, the future vision suggests that blockchain nodes from the private sector will be able to attach themselves to the Federal Reserve’s framework.
Where it all started
In 2016, the Boston Fed began testing their blockchain ideas with Ethereum. The team that is charged with developing the new supervisory node was not in existence at that time. In fact, the Boston Federal Reserve didn’t have any blockchain developers on their team. Instead, a few interested parties used online video content from streaming sites to educate themselves and begin what is now a very interesting idea.
Now, the Reserve is advertising job openings. They want to put together a development team that can take the supervisory node to a new level, as well as adding additional features and capabilities the blockchain.
While we may not see Boston Federal Reserve’s shiny new blockchain for quite a while, the promise it delivers is impressive. Should the team be successful in implementing a whole new approach to the way US banks operate, the technology could be one to pay attention to.