The Stack Archive

IBM to lead open-source semi-private blockchain for banking giants

Thu 17 Dec 2015

In March we reported that IBM was maintaining ‘informal discussions’ with the U.S. Federal Reserve whilst investigating the application of blockchain technology for financial services. Now that work has reached a new stage; the company has announced it will lead a crowd of coding giants in the development of a new blockchain financial transaction infrastructure called Open Ledger, for the benefit of major banking and financial institutions including Wells Fargo, JP Morgan and the London Stock Exchange.

The project will create a more flexible ledger of exchange, but will be unrelated – except in fundamental concepts – to the blockchain that currently underpins Bitcoin and other cryptocurrency systems. Furthermore the new system will be ‘semi-private’ in implementation, despite an open source approach to development.

Jerry Cuomo, the VP and CTO at the IBM software group commented: “The current blockchain is a great design pattern,” adding “Now, how do we make that real for business? What are the key attributes needed to make that happen? That’s what this organization is about.”

Open Ledger will be overseen by the non-profit Linux Foundation. IBM has been researching blockchain technology for the past year together with Digital Asset Holdings (DAH), which is led by Blythe Masters, recently of JP Morgan, and will take the project forward in the additional company of VMware, Fujitsu, the Japan-based Mitsubishi UFJ Financial Group and financial application-builder SWIFT. The resultant code from those 12 months of research are reported to provide ‘part of the foundation’ for Open Ledger.

Marley Gray, Director of Technology Strategy US Financial Services at Microsoft Azure, also told Fortune that the new system could provide additional security and operate as a major impediment to stock market gaming – and noted too the potential for the elimination of ‘expensive middlemen’, or the need to put trust into particular individuals and organisations.

Speaking to Wired, Linux Foundation head Jim Zemlin defrayed possible discussion about a ‘proprietary’ blockchain for the ‘majors’, emphasising that Open Ledger – which the same report mentions may end up being named ‘Hyperledger’ – is designed not only to be more flexible and instance-based but also is intended to collaborate with other blockchain infrastructures, commenting “We have a lot of confidence in this process.”

In the same report Jerry Cuomo emphasises the projected flexibility of the project: “We are very excited about blockchain, less as a once-and-only-once implementation of an idea, but as an idea that can be implemented and extended in ways that are consistent but enhanced.”, adding “There is no one blockchain to rule them all. There will be multiple implementations of the blockchain. And it will be a sin if they don’t interoperate and work together.”

Gray backs this notion of ‘open’ financial computing, in what is clearly a publicity initiative to prevent accusations of co-opting of an idea that has caught the financial and technical world’s imagination over the last three years: “A blockchain,” says Gray. “is basically worthless within a single work organization. There is no reason to have this trustless environment within your own corporation.”

Open Ledger – or Hyperledger – will certainly not be the first alternative transaction ledger to appear since Bitcoin came into existence, but it’s clearly poised to be the most influential and significant development in the application of the concept.


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