Unveiling 7 Key Benefits of the Revolutionary Payment Solution In the remarkable year of 2023, Bakong, Cambodia’s pride in digital payments, not only emerged as a national success but also paved the way for central banks globally. Even ...Read more
Unveiling 7 Key Benefits of the Revolutionary Payment Solution
In the remarkable year of 2023, Bakong, Cambodia’s pride in digital payments, not only emerged as a national success but also paved the way for central banks globally. Even the technologically advanced Prime Minister of Japan, Fumio Kishida, commended Bakong’s innovative strides.
Pioneered by the visionary National Bank of Cambodia (NBC) Governor, Dr. Chea Serey, Bakong marked a sincere endeavor to modernize the country’s payment systems by leveraging cutting-edge technologies.
Launched in October 2020, Bakong, a collaborative effort between NBC and Japanese technology company Soramitsu, utilizing the open-source Hyperledger Iroha blockchain framework, has witnessed an impressive adoption rate, with around 10 million accounts created since its inception. The key benefits of Bakong that have contributed to its success include:
1. Blockchain Flexibility
Bakong’s use of blockchain for digital asset management has allowed the implementation of fiat-backed digital representations of the Khmer riel and US dollar, catering to both wholesale interbank transactions and everyday retail payments.
2. Decentralized Operation
The NBC Bakong core system, geographically distributed, contains all transactions but no personally identifiable information (PII). This decentralized approach enhances security and privacy for users.
3. Voting Method for Transactions
Unlike traditional permissionless blockchains, Bakong employs a voting method rather than mining for finalizing transactions. A supermajority of servers maintains the blockchain, enhancing transaction finality.
4. Privacy Preserving
The separation of data, with end-users’ PII stored by financial institutions, ensures user privacy. The central bank can still monitor and leverage transactional data for improving monetary policy.
5. Security Measures
Bakong’s advanced security features mitigate risks of fraud, hardware failure, tampering, and cyberattacks, ensuring a robust and secure digital payment environment.
6. Cost Reduction and User Inclusivity
By unifying banking processes under Bakong, interbank transaction costs are minimized, and transactions by end users are currently free. This fosters financial inclusion and reduces barriers to digital payment adoption.
7. Auditable and Criminal Activity Deterrent
The permanent digital record of all transactions makes Bakong easily auditable, unsuitable for criminal activity, and ensures financial institutions continue to carry out due diligence.
The NBC’s annual report reveals significant growth, with cash payments through Bakong soaring in 2022. Notably, 0.52 million accounts were created by financial service consumers, and Bakong has garnered support from 69 banks and financial institutions.
Furthermore, Bakong’s expansion into cross-border payments is a testament to its global influence, connecting with countries like Malaysia, Thailand, Vietnam, Laos, and aspiring to expand to China, Myanmar, and India.
The innovative cross-border QR code payment system and talks with the National Bank of Rwanda showcase Bakong’s potential to transform global financial landscapes. Additionally, the collaboration with UnionPay International and Soramitsu’s ‘Mukumi’ network underline Bakong’s role in facilitating international transactions, benefiting Japanese merchants and Southeast Asian economies alike.
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