The Power of Private Blockchains Is Beginning to Show

Cryptocurrency purists often dismiss private blockchains as overly expensive undertakings for projects that are better served with a traditional database.

While they fall short of the public blockchain ideals of censorship resistance and permissionlessness, these contained, private experiments are extremely useful to the development of the overall blockchain industry.

One example came last month, with a first-of-its-kind blockchain bond issuance by the World Bank.

In partnership with the Commonwealth Bank of Australia, the international development institution used a private Ethereum blockchain to sell a two-year bond worth 110 million Australian dollars to seven investors.

In enabling "Atomic settlement" of the security transfer side of these transactions, the World Bank's experiment showed that a blockchain bond could "Potentially reduce the settlement problem to seconds rather than days," Snaith said.

The World Bank issues $50-$60 billion in bonds every year.

The concept's relevance goes beyond the World Bank's bottom line.

As I've argued elsewhere, I also see its engagement - along with the International Monetary Fund and the United Nations - as an opportunity for everyone, including even libertarian crypto developers intent on bypassing such centralized entities, to learn about the real world impact of blockchain technology on our global financial system.

The good news is that there is more to learn from the life cycle of the newly issued World Bank bond.

Though only a two-year issuance - unlike the Bank's usual five- and ten-year bonds - there are still four more "Events" to study: three six-monthly payments of interest coupons and the final maturity of the instrument when the principal repayment and final interest disbursement will be made.