Since we founded Guardtime over 10 years ago we have continued to develop a strong and deep relationship with the Estonian Government. The impetus for starting Guardtime was to eliminate trusted parties in the verification of information, thereby protecting mission critical systems from nation-state cyber-attack. Since then, we have seen our technology broadly adopted throughout the core infrastructure and key services of eGovernment in Estonia, from law enforcement to medical records. Our Coliseum Cyber Range product was designed in collaboration with the Estonian Ministry of Defense for enhancing cyber resilience and our health-care products were developed based on a long standing collaboration with the Estonian Health-Care authorities.
So it is with a strong sense of pride that we share the news that Eesti Pank, Estonia’s Central Bank, has announced a multi-year partnership with Guardtime for research into the deployment of a Central Bank Digital Currency (CBDC). The implications of a CBDC deployed at scale are profound and we believe there is no better place in the world to do a public private partnership around digital currency than Estonia.
Estonia is recognized as a world leader in eGovernment. It is the only country that has deployed blockchain at scale. Estonia is a world leader in fintech innovation producing global unicorns such as Transferwise and emerging fintech companies like Funderbeam and Salv. We believe this represents a significant opportunity as the combination of experience, agile government, cryptographic expertise and entrepreneurial spirit has the potential to put Estonia at the forefront of digital currency innovation.
Digital Currencies have always been on Guardtime’s agenda. Indeed, our first conversations about building a digital cash system with Central Banks started in the early 2000s. Although there was no clear market opportunity then, we continued to do fundamental research. Over the last 5 years our research efforts intensified, leading to the invention of KSICash, a full stack infrastructure for CBDC built on KSI Blockchain.
Over the weeks and months ahead we will have a lot to say about KSICash, its properties and why we think it can be a strong candidate for a CBDC, meeting the scalability, performance, security and resilience requirements that central banks will demand.
Before that it is worth talking about why blockchain is necessary at all, considering digital bank money has been working just fine for the last decades. The answer, we believe, is accountability and security. A blockchain, whether used for the issuance of retail digital currency or for interbank settlement, provides public cryptographic proofs for the correctness of the system. A failure of the system, whether a system fault, an insider or nation state cyber-attack can all be immediately detected. No banking system can achieve this today and that is the promise of blockchain – to provide immutable proof to users and regulators of the system that everything is operating correctly. A citizen who has a digital euro, pound or dollar under their digital mattress, will be able to present it with cryptographic proof that he owns this claim against the central bank without any possibility of dispute.
At Guardtime we design machines – virtual distributed computers that execute tasks with cryptographic proofs in a zero-trust environment. We have built these machines for the world’s largest defense contractors for security of information, software and physical supply chains. We have built these machines for pharma and insurance companies that want to agree on new types of drug pricing. We have built these machines for telecommunication providers that want to improve cloud and 5G security. There is in fact an unbounded number of use cases for blockchain technology enabling automated computation of business processes and systems for which security, compliance and audit are encoded into their design.
Our next big challenge is CBDC. Watch this space!