The guidance provided by the Hong Kong Monetary Authority (HKMA) to banks regarding the use of blockchain technology emphasized the importance of evaluating each solution individually to mitigate risks, particularly those associated with public blockchains.

One significant risk highlighted was the potential untrustworthiness of pseudonymous validators. While the HKMA did not dismiss the use of blockchains with such validators, it stressed the necessity for banks to implement measures to address and reduce these risks.

Additionally, other risks identified included the possibility of malicious actors accessing sensitive information, network forks, 51% attacks, network congestion, and temporary or permanent network failures.

To address the risk of malicious actors obtaining sensitive data, the HKMA suggested utilizing zero-knowledge proofs (ZKPs) as a potential solution. Another approach recommended was storing sensitive information on off-chain solutions like Overlay Networks.

In contrast, the author expressed the opinion that the original Bitcoin protocol effectively mitigates these risks. They highlighted that the Bitcoin SV (BSV) network, for instance, does not have pseudonymous validators, and its design minimizes the likelihood of network forks and 51% attacks. The author also mentioned the network’s ability to handle high transaction volumes with minimal fees and the upcoming enhancements through Teranode for even greater scalability.

The author commended the HKMA for recognizing the risks associated with public blockchains and proposing solutions while acknowledging the potential of blockchain technology. However, they advocated for a broader adoption of solutions like the BSV Blockchain, which they believe can address many of the challenges faced by monetary authorities globally.

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