Paper 2021/360

An Architecture for Blockchain-based Cloud Banking

Thuat Do

Abstract

Blockchain has been practiced in crypto-currencies and crossborder banking settlement. However, no clear evidence that a distributed ledger network (or Blockchain) is built within domestic payment systems, although many experts believe that Blockchain has wide applicability in various industries and disciplines. As the author’s best knowledge, no one has published a clear architecture and a feasible framework for a Blockchain-based banking network. Thus, \how Blockchain can be implemented in domestic banking systems" is a big challenge. The most important contribution of this work is to give a feasible and viable framework resolving that problem. The author investigates a Blockchain-based payment framework, more explicitly, a decentralized banking architecture running on the top of existing banking cores. The Blockchain network has two tiers: master nodes (block generators) and normal nodes (validators). The consensus mechanism is introduced as a composition of Proof of Stake, Proof of Reputation and/or practical Byzantine Fault Tolerance. In addition, nomination and approval mechanisms are added to the governance to enhance legal compliance and compatibility with real Fintech space. Some qualitative analysis is provided to show that the proposed Blockchain banking framework offers better security, scalability and decentralization, while easily adapt with different national regulation environments, among other Blockchains. In the application aspects, the framework is implementable and deployable for decentralized payment network and smartcontract infrastructure for domestic markets, then enable a complete and unified digitized space for cloud banking and financial services.