Bundesbank and Deutsche Börse Completed Blockchain Settlement Tests

Deutsche Bundesbank and Deutsche Börse announced on October 25, 2018 that two jointly specified blockchain prototypes had completed performance testing for securities settlement. Their BLOCKBASTER research project modeled payments, bond transfers, delivery-versus-payment settlement, interest payments and bond redemptions on permissioned distributed ledgers.

The institutions reported that prototypes built with Hyperledger Fabric and Digital Asset technology met the performance requirements of their modeled use case and could be considered for further development. That was a consequential institutional finding in 2018: a central bank and a major exchange and post-trade operator had moved beyond a basic demonstration to examine whether distributed-ledger systems could handle workloads resembling financial-market infrastructure.

The result was not a production launch, a cryptocurrency deployment or a finding that blockchain was superior to conventional settlement technology. The final report explicitly described BLOCKBASTER as a research project intended to produce analytical results rather than an operational system.

What the prototypes were designed to do

The project represented cash as intraday “digital coins” and securities as “digital bonds.” Money could enter or leave the ledger only through a designated coin-providing authority, while bonds moved through an equivalent bond-providing authority. Banks could conduct cash payments, free-of-payment securities transfers and delivery-versus-payment transactions. The system also modeled coupon payments and redemptions.

Digital coins were automatically moved off the ledger at the end of each business day. Non-banks could not hold them, and the design did not create money or alter the amount determined outside the system. Those restrictions separated the experiment from a retail central-bank digital currency or a freely circulating crypto asset.

Participation was permissioned rather than public or anonymous. The report said the design incorporated admitted participants, know-your-customer controls and transaction confidentiality based on a need-to-know principle. In the institutions’ interpretation, adapting distributed-ledger technology to existing governance, finality and regulatory requirements was essential for financial-market use.

Two test programs, with different boundaries

The Hyperledger Fabric test used version 1.0.5, 1,000 modeled users or banks, 500 bonds and 200,000 transactions. Those transactions comprised 100,000 delivery-versus-payment transfers, 50,000 free-of-payment transfers and 50,000 cash payments. Components ran on separate Amazon Web Services instances within one availability zone. Runs took about 35 minutes on average, and the report identified average latency in the tens of milliseconds.

The researchers also recorded transaction conflicts associated with the architecture. They concluded that Hyperledger Fabric appeared sufficiently performant for consideration in the selected use case, but conditioned that conclusion on a proposed concurrency solution working adequately. They also said claimed improvements in newer software required dedicated testing.

Digital Asset’s platform underwent 30 scenarios covering changes in transaction volume, nodes and participants. Its base scenario modeled 150 banks, three deployed instances in one AWS region and availability zone, 250,000 payments, 1 million free-of-payment transfers, 2.5 million delivery-versus-payment transfers and 10,000 coupon-payment workflows. Tests generally ran for 30 minutes; the base case was also run for 20 hours, with results reported as consistent with the shorter run.

Why the conclusion remained provisional

The report’s strongest defensible conclusion was that both technology stacks appeared capable of meeting the performance requirements of the particular modeled settlement use case. It did not establish comparative operating costs, production resilience across regions, legal finality under live conditions or integration with every existing market system.

The authors said a full settlement-wide cost-benefit analysis would be required to determine whether distributed ledgers were superior to centralized systems. They identified possible disadvantages including latency and CPU use, alongside possible benefits such as resilience and reduced reconciliation through a shared database.

No cryptocurrency price or market-return claim is made here. BLOCKBASTER tested institutional settlement infrastructure, not a traded token, and the reviewed sources supply no instrument, venue, pair, timezone or event window from which a reproducible crypto-market reaction could be measured. On October 25, 2018, the verified development was therefore an infrastructure research result—not evidence of adoption, commercial deployment or investment performance.