MUFG, Japan’s biggest bank, has announced plans to launch a ‘hyper-scale’ blockchain payments network to be co-developed with cloud delivery giant Akamai for faster, cheaper payments.
In an announcement [PDF] on Monday, the Mitsubishi UFJ Financial Group (MUFG) revealed details of an ongoing partnership with US-based cloud content delivery giant Akamai that sees the two companies design a blockchain that was verifiably capable of processing a million transactions per second under real-world conditions.
The blockchain is also capable of processing those transactions at latencies of less than two seconds per transaction – the time taken to confirm and finalize a batch of transactions on the ledger. Notably, the companies expect the technology to be improved upon to handle as much as 10 million transactions per second.
These are significant claims compared to the likes of the public bitcoin blockchain which is currently capable of processing up to 7 transactions per second at a maximum and the ethereum blockchain that has an estimated peak of 20 transactions per second. Visa, the world’s largest payments network, claims it is capable of handling 24,000 transactions per second.
The payments network will include support for current payment processors, micropayments, pay-per-use transactions, and other IoT-enabled payments in the future, the companies said. “[We will] support the diverse payment options of the sharing economy by offering an open platform,” they added. It remains to be seen if the blockchain is indeed an ‘open’ or a public network since blockchains developed by private firms or banks are typically permissioned ledgers that only allow verified participants.
While details of the blockchain platform are scarce, MUFG explains the platform is capable of transactions at ‘hyper’ speeds by positioning all nodes of the blockchain that on the Akamai Intelligent Platform, the company’s popular cloud service offering.
Akamai co-founder and CEO Tom Leighton added:
“This new blockchain-based online payment system, built upon our cloud platform, will be designed to address the concerns related to scalability, latency and security that have to date hindered broader use of blockchain.”
The payments network will be enabled with an interface that can be used as a communications network and will also allow transfers and management of value over the blockchain. Transactions executed on the payments network will be secured by Akamai’s cloud security and is expected to launch in Japan during the first half of 2020.
Among the world’s top 5 banks with trillions in assets, MUFG is heavily involved in the cryptocurrency and blockchain sector. The bank, along with its ‘megabank’ rivals, is invested in Japan’s biggest bitcoin exchange bitFlyer, as well as San Francisco-based industry giant Coinbase.
In November 2016, MUFG was part of a payments pilot using a blockchain developed by bitFlyer to scale 1,500 transactions/second, beating the 1,400 transactions that the current Japanese interbank wire system is capable of, at peak speeds.
MUFG is also rumored to be putting together a team of developers ahead of launching its own cryptocurrency exchange to target institutional and retail investors. The bank has publicly confirmed efforts to develop its own cryptocurrency, dubbed ‘MUFG Coin’, which is expected to see its first large-scale trial among retail bank users in 2019.
Featured image from Shutterstock.