Blockchain startup Chain is today releasing a new open-source, permissioned protocol built in collaboration with 10 financial and telecom firms.
Partners on the project include an impressive list of major financial firms, such as Capital One, Citi, Fidelity, First Data, Fiserv, Mitsubishi UFJ, Nasdaq, Orange, State Street and Visa, all of which contributed to the technology, called the Chain Open Standard, or Chain OS 1.
In interview, Chain CEO Adam Ludwin asserts the platform is tailor-made for high-scale financial applications, including securities clearing and payment processing. Long in development, Ludwin described the release as a formalization of the platform it has used on test projects for First Data, Nasdaq and Visa, among other partners.
Ludwin told CoinDesk:
“What you’re seeing is really the first step of a bottom-up process that stands in contrast to the top-down approaches that have gotten a lot of attention the last several months. Chain OS 1 was not a committee-driven effort, a way to get everyone in the room and say ‘Let’s create a network’.”
While Ludwin didn’t name any competitors specifically, his comments allude to efforts like the Hyperledger project, an open-source blockchain initiative led by the Linux Foundation, and Corda, an in-development ledger platform being built by consortium R3CEV.
Ludwin suggested such processes are perhaps flawed in their approach to technology design, akin to trying to build a “rubber band ball” simply by shaking a box and hoping it turns into an elegant sphere
“You create a core by tightly building the first things around a core, then it’s easy to add bands, and that’s what we’ve done with Chain Open Standard 1,” Ludwin said.
In this way, Ludwin said he sees Chain OS 1 as a “structure”, rather than a proposal, positioning the platform as one that should be considered by major institutions considering permissioned blockchain options in the market.
The announcements comes amid heightened competition from permissioned blockchain platform providers for high-profile projects.
In recent weeks, Barclays has unveiled a smart contracts template test built on Corda, while the DTCC has indicated it is working with Digital Asset Holdings on trials related to Hyperledger’s technology.
Behind the scenes
Throughout the interview, Ludwin sought to describe the project as one that has been some time in the making, providing an overview of the different steps the company has taken toward the creation of Chain OS 1.
Ludwin said, for example, that Chain recently held a private conference with its financial industry partners in New York, that included software demonstrations.
The scale and depth of the presentations, he contends, could have easily attracted news. However, he sought to frame Chain as a company that was not looking to attract attention except for more serious announcements.
“People sneeze and say blockchain and it gets a press release,” Ludwin said. “This was arguably the biggest deepest blockchain event that happened and the reason that we didn’t do press was we wanted to create an environment that people can share things publicly, things that are very strategic.”
Ludwin said that Chain is seeking to launch a second partner conference in fall 2016 that will be open to further industry participation, and that the startup plans to hold similar events twice a year going forward.
“All of the institutions that we bring into the fold over the next three to five months will get invited and be able to participate,” he added.
Specification details
In prepared materials, Chain describes OS 1 as a “novel consensus model” that achieves finality in seconds, even for high-volume transactions.
Further, it boasts a “privacy solution” that encrypts blockchain data, providing what it called “selective access” to counterparties and regulators. Chain OS 1 is also equipped for Turing-complete smart contracts and virtual machines, two components perhaps most often associated with the open-source Ethereum blockchain project.
Elsewhere, it allows for participants to keep a full historical copy of the network’s distributed ledger, or a shortened version containing only the “unspent state”, thereby lowering operational requirements.
Chain’s partners assert that this combination of features has the ingredients needed for enterprise institutions to build projects that could become commercial applications.
“Chain’s protocol supports some of the most complex use cases we have in mind,” Hu Liang, senior managing director at State Street, said in statements.
Nasdaq indicated it is using the platform for private market securities testing as well as for its proxy voting and clearing efforts.
Innovation over incumbents
Group efforts aimed at permissioned blockchain development weren’t the only target for Ludwin’s critiques, however.
In remarks, Ludwin positioned Chain as the kind of “Silicon Valley startup” that financial institutions should want to partner with on blockchain efforts, as it doesn’t bring the kinds of complications and conflicts that can come with working with an established firm.
“The bigger IT companies that are showing up, you want to ask, ‘Are they trying to sell me something else?’ That’s always going to be a question,” Ludwin said.
The comments come as a growing number of traditional IT firms, including Microsoft and IBM, seek to attract institutions to their various platforms and offerings.
Ludwin concluded:
“The advantage of startups like Chain is we build exactly what we need.”
New York image via Shutterstock