Dutch central bank executive Ron Berndsen reveals details of blockchain trial

Ron Berndsen, head of market strategy at the Dutch Central Bank, revealed details of the bank's blockchain pilot project and digital currency DNBCoin at a conference in the Netherlands. This time, the main purpose is to simulate and modify the Bitcoin system and conduct actual blockchain development. However, the project is limited to a small range of internal employees, and the core digital currency DNBCoin is only used for internal testing. The first two prototypes of DNBCoin mainly regard blockchain as a carrier of virtual currency. Because this is not the most promising application of blockchain, the development direction will be changed later. It is hoped that the defects of the existing blockchain can be improved through the efforts of the bank.

Translation: Annie_Xu

Ron Berndsen, head of the Netherlands Central Bank (De Nederlandsche Bank), revealed some interesting details about the bank’s blockchain trial project and the digital currency DNBCoin at a recent conference.

“We started experimenting with DNBCoin last year, and our overall idea was to modify the Bitcoin software so we could gain a deeper understanding of how blockchain is actually implemented, rather than just focusing on experiments.”

"To prevent misunderstandings, DNBCoin is only used for internal testing and will not be used for circulation. There is no traditional steering committee, working group, command and budget set up specifically for this experiment. We simply formed a steering team among our colleagues and enthusiasts, who come from different departments. Innovative work must have an innovative environment."

The bank's modifications to the Bitcoin client software included two aspects. The first prototype of DNBcoin replicated the early Bitcoin, using a network of five laptops and a homemade Genesis Block.

"We can generate thousands of blocks, put transactions in and set fees. Our settings will make mining too fast, like three seconds for Bitcoin instead of 10 seconds. Happily, the software finally issued a warning, 'An unusually large number of blocks were generated in the past four hours.'"

The second DNBCoin prototype once again pushed the limits of Bitcoin by jumping to the year 2140, the day when the last 21 million Bitcoins are issued. The maximum total supply is calculated based on the mathematical fact that the supply of 50 Bitcoins per block is halved every 210,000 blocks, starting from the original 50 Bitcoins per block.

Ron Berndsen

"Perhaps you know that the next Bitcoin block reward is 25 to 12.5 Bitcoins and is expected to happen in the next few weeks. We thought that the second prototype could therefore become a so-called pre-mining variant. Before opening the network to other laptops, only one computer can mine DNBcoins. In order to minimize energy consumption, we set the first block to mine 1 billion DNBcoins, and the number will be halved more frequently, that is, every two blocks. In this way, 3 billion DNBcoins can be generated in 30 seconds. In addition, we found that after the DNBcoins are generated, blocks can be developed and added to the blockchain. The reward will drop to zero, but the miner who found the block can still collect transaction fees."

"The focus of these two prototypes is to use blockchain as a carrier of virtual currency. However, virtual currency is not the most promising application of blockchain, so the third DNBcoins prototype no longer focuses on virtual currency."

“Let me summarize. History tells us that when looking into the future, it is wise to anticipate what is possible, not what is impossible. Blockchain technology offers many advantages over existing technologies, but it also has flaws and obstacles that need to be overcome. It is time to end the Jeopardy game. Today, my prize-winning guessing game for blockchain is ‘What is the technology for the next generation of financial market infrastructure?’”