The world has been more digitized with the development of IT technology and the transition to a contactless society due to the COVID-19 pandemic. As many industries and environments become digitized, the digitization of money is also accelerating. From 1993 to 2022, over 100 CBDC(Central Bank Digital Currency) projects were launched, and many countries are joining the race for CBDC development.
Here is an interview with Cizar Bachir Brahim, CSO of Sovereign Wallet, and one of the key players at Sovereign Wallet in expanding the CBDC business in the Nordic region, about how CBDC development has been doing worldwide and the strengths of the Sovereign Wallet’s CBDC blockchain platform compared with other CBDC platforms.
1. Please introduce yourself and the company Sovereign Wallet.
My Name is Cizar, and I’m the Chief Strategy Officer of Sovereign Wallet. I’m based in Stockholm-Sweden, overseeing the global market expansion to build a sustainable ecosystem for the company. Before introducing the company, let me give you a brief background of who I am and why I joined Sovereign Wallet two years ago.
Before I met Phantom (the founder & CEO of Sovereign Wallet), I was running several companies in investment mediation, innovation strategies, and business development for startups. I was also an academic researching innovation and entrepreneurship. I wrote the book “Colony of Innovative Startups: A Practical Guide for Policymakers and Corporate Leaders” published in early 2020. The book suggests an unorthodox way of building an ecosystem of innovative startups and proposes four main lessons to retain for the success formula:
- A company with a genius idea that can solve a real-world problem
- A product with the ability to be sold to clients
(Customers-Based Business Model) - A vision to sustain through building its ecosystem.
- Using futuristic technology (ex., Blockchain, DLT technology, etc.)
For all four(04) criteria mentioned above, I could smell, touch, and identify during the 1st meeting with Phantom. Then, I started to be interested in Sovereign Wallet’s philosophy and technology, had more discussions with the company founders, and exchanged possible ways of collaboration; as time passed, I realized that I could add more value by being an insider and accepted the founder’s invitation to join the company, and here I have now joined the dream of Sovereign Wallet with a mission to build the internet of sovereign digital currencies and contribute to shaping the future of payment, a more transparent and inclusive financial system.
Sovereign Wallet has developed MetaMUI Blockchain, the world’s first identity-based blockchain, the state-of-the-art fourth-generation blockchain with the main net launched on January 3rd, 2021. Sovereign Wallet’s headquarter (HQ) is located in Seoul, South Korea, and the company has four companies under the name “Sovereign Wallet Network (SWN) Global,” present in Singapore, Sweden, India, and Uzbekistan.
The founder and CEO of Sovereign Wallet, Phantom Seokgu Yun, is one of the best security experts in the security expert. Before establishing Sovereign Wallet, he provided security software to the South Korean government and big corporations, including eBay Korea, Kakao, Samsung Electronics, Samsung Life Insurances, SK Telecom, LG Telecom, KOSCOM, Yahoo Japan, Rakuten, and many more. He also provided the security software during the G20 Summit in South Korea in 2010.
Sovereign Wallet’s research partner is the University of Southern California Viterbi School of Engineering, led by Prof. Bhaskar Krishnamachari and Prof. B. Clifford Neuman. We’ve had a very successful collaboration over the past three years since 2019 and are continuing to achieve our strategic goals.
The company has six patents applied for and 18 patents acquired, and three academic papers published at IEEE conferences.
2. Most companies in the blockchain industry mainly focus on developing NFT and Defi platforms, and many investors are interested in that too. What makes Sovereign Wallet focus on CBDC development?
Having CBDC development as the main focus of the Company’s strategy doesn’t mean we are not involved in developing futuristic solutions that will shape the financial and payment industry.
First, we are a fintech company with uniquely distinguished advanced technology. We believe we are already representing the 4th generation blockchain, and we are the world’s 1st identity-based blockchain.
To answer the question, we are not only focusing on CBDC, even though we are convinced that any future development in payments and banking should consider an operational digital currency system. That’s why CBDC deployment is fundamental, the reason why Sovereign Wallet is investing more resources to make our MetaMUI CBDC platform available by the end of this year. So any Central bank can explore and test its advanced features and run pilots on it.
Another thing that I want to highlight is that the MetaMUI CBDC platform is not limited to digital currency issuance. It is considered an innovation platform enabling a sustainable digital ecosystem of innovations. Some DeFi features are already deployed on top of the MetaMUI platform, such as the National Identity System, e-Government services, and Digital Assets Tokenization which also covers green finance and carbon trading features.
3. Many countries, including Sweden, Canada, France, Korea, etc., are developing their own CBDC platform. What is the reason they focus on the CBDC development so eagerly?
It is indeed an international movement, where almost 90% of Central banks have entered the CBDC race, either in research, development, or potential pilot implementation.
To know the reasons behind this movement, we must dive deeper into understanding the current transformations in the global financial system. An aging system with over 100 years of existence is characterized by multiple hits, crises, and serious threats. It is now trying to adapt to unstable circumstances to remain operational. However, the past century witnessed similar attempts to reform/change every time a major crisis hits the financial system: from the 1929 great depression to the Breton Woods Agreement, the Nixon shock in 1971, to the 1997 Asian financial crisis, which was followed by the 2008 global financial crisis until the 2020 covid pandemic… to name few — adding to that two particular threats triggered an alarming situation among central bankers, digitalization, and the increasing adaptation of cryptocurrencies globally.
All the circumstances mentioned above are the main drivers for a global reflection toward finding sustainable remedies to the aging global financial system.
That’s why we are seeing the central banking community worldwide joining the efforts to seriously consider Central Bank Digital Currencies(CBDCs), which might be one of the valuable solutions to build a better, resilient, sustainable, and futuristic financial system.
It might be relevant to mention that what we live today in the CBDC era is not completely new. A quick look in history shows that similar initiatives aimed to have a digital form of money that replaces cash: the BANCOR of 1945, for example, was the 1st attempt to create a digital currency for international transactions. Thousands of cryptocurrencies are trying to replace the existing financial establishment outside the banking and financial system.
I cannot predict how the war between the two worlds (Cryptocurrencies vs. Sovereign Digital Currencies) will end. Still, I’m convinced that the international financial community is working hard to reform the current financial system and build a better, more inclusive, transparent, and resilient financial system.
Through the genius invention of its MetaMUI CBDC, Sovereign Wallet is joining the global effort and aiming to contribute to building the Internet of Sovereign Digital Currencies.
4. Sovereign Wallet opened its subsidiary office in Stockholm, Sweden. Could you share with us the current CBDC market situation in the Nordic region and what is your plan and strategy to expand the CBDC business in the Nordic region?
First of all, I would instead ask the following question: why specifically Sweden and not other Nordic countries?
The answer is pretty simple: Sweden is the largest Nordic country and a well-connected economy, and when it comes to financing and banking, the Swedish Central Bank (Sveriges Riksbank, or simply the Riksbank) is the world’s oldest central bank, founded in 1668. When it comes to CBDCs, the Riksbank experience is the most outstanding example so far. The research on CBDC started in 2017, and the e-Krona pilot launched in 2020. However, no decision has been made yet on whether an e-Krona publication- is suitable for the nearest future.
For Sovereign Wallet, being present in Sweden allows us to interact with the Riksbank and explore possible ways of introducing the MetaMUI CBDC platform, testing its features, and ensuring a continuous enhancement of the platform services.
Another reason for choosing Sweden, particularly Stockholm, is the Bank for International Settlements Innovation Hub(BISIH) Nordics. The BISIH Nordics was launched in June 2021 and gathered all four Nordics Central Banks in one place. This is the perfect opportunity for Sovereign Wallet to bring MetaMUI technology up front and introduce it to the representatives of four Central Banks (the Riksbank, the Norges Bank, the Icelandic Central Bank, and the Danish Nationalbanken).
Sovereign Wallet had a very fruitful discussion with the BISIH Nordics during the past months. We hope to resume these talks this month and pave the way for a fruitful collaboration between MetaMUI and the BISIH Nordics.
5. China succeeded in commercializing its non-blockchain-based CBDC called “e-CNY.” What is the difference between blockchain-based CBDC and non-blockchain-based CBDC?
It is evident that the Chinese e-CNY, also known as the “Digital Yuan,” is a non-blockchain-based form of digital currency issuance. Let’s look into its early development to understand its differentiation from the current CBDCs.- The e-CNY project’s official name is “Digital Currency Electronic Payment (DC/EP)” even the People’s Bank of China (PBoC) made it clear from the beginning that this is an electronic form of payment, somehow similar to digital banking. When exploring the operationality of the e-CNY, we must highlight an import feature as described by the PBOC: “The e-CNY is a digitized version of China’s legal currency, the renminbi (RMB). It is issued by China’s central bank, the People’s Bank of China (PBOC). It is designed mainly for high-frequency, small-scale retail purchases and transactions.”
The statement above underlines that the entire project focuses on enhancing payments and improving digitalization, which in my opinion, is very close to an open banking / digital banking kind of system.
However, a CBDC description has a much broader explanation of the Central Bank’s role while issuing a digital currency, which closely imitates cash issuance and monetary policy elaborations.
In short, a CBDC would preferably maintain the classical role of a Central Bank as the country’s sovereign authority that oversees the national monetary policy and offers a digital form of money that covers most cash characteristics.
To compare with blockchain-based CBDC. MetaMUI technology is completely different! MetaMUI is the world’s first identity-based blockchain. It uses a hybrid system of high-performance digital cash and high-security digital checks. This hybrid architecture allows MetaMUI’s blockchain to be used in global-scale applications, including central banks, digital stock issuance, digital currency exchanges, non-fungible tokens, and more.
MetaMUI utilizes an indigenous multi-ledger architecture, meaning each digital currency generated on MetaMUI Blockchain will have its blockchain ledger. We also offer a pre-built identity blockchain and digital asset blockchain. Our node system consists of Bank nodes and Mobile nodes.
The MetaMUI CBDC platform offers the possibility of issuing Central Bank Digital Currencies in the most secure and technologically advanced way.
6. What are the differences between public blockchains, including Bitcoin, Ethereum, Tezos, Algorand, etc., and the MetaMUI Blockchain?
We’ve developed solutions significantly ahead of other enterprise blockchains in scalability and compliance, making us the ideal technology choice for a country-wide CBDC implementation.
MetaMUI is not the only platform offering blockchain-based digital currency issuance. However, our extensive research and advanced development have provided us many advantages over other enterprise blockchain platforms. The main competitors in this field would be R3 Corda, Enterprise Ethereum, Bitt, G+D, Ripple, and Hyperledger projects — including Hyperledger Fabric.
However, broad-usage enterprise blockchains still run into performance issues. They are not built specifically for financial applications and are neither made to accommodate wide-scale adoption. An Ethereum-based solution or other existing enterprise blockchains would not be sufficiently scalable for countrywide implementation.
Remember that the public Ethereum blockchain only supports up to 1.1~1.2 million daily transactions, and any major scaling increases are currently not foreseen.
Hyperledger Fabric is benchmarked at up to 3,500 transactions per second(TPS). However, it does not include any identity integrations, and the peak benchmark numbers are currently only possible in a fully controlled environment. The approach to scale by utilizing channels has some major concerns. We have identified that Hyperledger Fabric is unlikely to scale sufficiently for a real-world CBDC implementation due to the number of channels required to be established and other technical factors.
In short, no blockchain platform other than MetaMUI can offer identity-based transfers, which are the core of a legally valid CBDC issuance. We also provide far higher scalability thanks to our hybrid model, which sets us far ahead of any other blockchain solution provider for this use case.
As the other enterprise blockchains are built for broader use cases and are not financial-specific, we are uniquely positioned to be the primary choice for any country that wants to expedite its central bank digital currency issuance and not rely on time-consuming and expensive custom developments to build one from scratch.
7. Lastly, please tell us how you view the future of CBDC and the mid-to-long-term roadmap and vision of Sovereign Wallet.
Let me start with the Sovereign Wallet roadmap, which covers the MetaMUI expansion strategy for the coming years. We plan to strengthen our presence in Europe and the Nordics region to get MetaMUI technology involved in many digital payments-related projects. We are reaching advanced stages in talks with the BISIH Nordics to take part in two important projects for the Nordic payment ecosystem (Project Aurora and Project Polaris). We multiply our efforts on the digital euro project through a strategic partnership with the Digital Euro Association and other regional stakeholders.
Another direction that MetaMUI is preparing to head for the end of this year is the GCC region(Gulf Cooperation Council); we have already appointed exclusive agents representing Sovereign Wallet in all GCC regions (KSA, UAE, Qatar, Oman, Kuwait, and Bahrain). A subsidiary company is planned to be established in one of the GCC countries. Stay tuned for the good news.
In summary, we will see MetaMUI achieving interesting milestones during 2023 and contributing significantly to building the Internet of Sovereign Digital Currencies (IoSDC).
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