Tag Archive for: hyperledger project

Hyperledger blockchain projects: from incubation to production-ready status

| 26-04-2018 | Carlo de Meijer |

Last year I wrote a blog on the Hyperledger project and what that could mean for blockchain acceptance (see my blog: Hyperledger Project: collaboration pays off, 9 April 2017). We are now almost a year later and I am wondering if they are meeting my expectations. “2017 was a milestone year for Hyperledger both for new members and for new technical breakthroughs. In 2017 we doubled our membership, gaining companies like American Express, Cisco, Daimler and Baidu, and we’re expecting more companies and organizations to join in 2018.” Brian Behlendorf, Executive Director, Hyperledger.

Many blockchain followers know the Hyperledger Fabric Framework. This is the most used one in the various trials worldwide. But in the meantime the Hyperledger community has developed a whole series of these projects and tools that are less familiar. The purpose of this blog is to get more insight into these offerings and how they are developing from the incubation to the real production-ready status.

But first of all a reminder!

The Hyperledger Project

The Hyperledger project that was launched end 2015, is the international blockchain consortium of companies and organizations hosted by the Linux Foundation. Their goal is to collectively build an open source platform for the development of blockchains. Hyperledger thereby aims to enable organizations to build robust, industry-specific applications, platforms and hardware systems to support their individual business transactions by creating enterprise grade, open source distributed ledger frameworks and code bases.

The project has attracted the attention of several large companies that were early adopters of distributed ledger technologies at that time. The consortium nearly doubled in size last year to reach almost 200 members. Today, more than 220 organizations now support the Hyperledger initiative, including leading companies in finance, banking, Internet of Things, supply chains, manufacturing and technology development.

Pros of the Hyperledger project

The Hyperledger project has a number of pros that distinct them from other blockchain consortia. First of all Hyperledger is open-source, offering a “neutral home” for incubating technology. They are developing codes as open-source and bringing enterprises together to share knowledge and experience. This may lead to much faster adoption and better solutions than if it is simply built in-house. Second, Hyperledger is not focusing on one area of appliance, but on universal use cases. The software developed at Hyperledger has been adopted in many industries including supply chain, healthcare, finance etc. But what is more important, the Hyperledger Fabric, one of the (considered) most mature, extensive, flexible and active developed frameworks, allows users to create private channels in public settings, enabling the security and privacy that is needed.

Umbrella strategy

Hyperledger operates under an “umbrella” strategy. It is set up as a specialized hub for blockchain projects that facilitates not only the development, but also the commercialization of enterprise-grade blockchain based projects. Hyperledger “incubates” and promotes blockchain technologies for business, including distributed ledgers, client libraries, graphical interfaces and smart contract engines.

This strategy nowadays encompasses a (growing) number of blockchain projects, including blockchain frameworks, in addition to a number of development tools. At the moment Hyperledger incubates nine business blockchain and distributed ledger technologies, of which five blockchain frameworks and three development tools. These are in various stages of development and cover unique blockchain applications.

Read the full article of our expert Carlo de Meijer on LinkedIn

 

Carlo de Meijer

Economist and researcher

 

 

Accenture and blockchain: the accent on security issues

| 13-11-2017 | Carlo de Meijer |

My last blog was about IBM, triggered by a Juniper Research putting the company as the number one in the blockchain technology competition. One of the comments on this blog was that it looked like an IBM press release. But that is far beyond what is meant. I just looked at what the tech company was doing in the blockchain arena and why it could be adopted as the main blockchain model when blockchain adoption could become mainstream. In a previous blog I already talked about Microsoft’s CoCo platform, the number two in the Juniper Research asking myself if that could become a game changer (see my Blog: Microsoft CoCo Framework: blockchain game changer, August 29, 2017). Today I will go into some more detail in the blockchain activities of Accenture, number three according to the Juniper survey.

Accenture: where do they stand?

Looking at the various blockchain alliances or consortiums, of the top three in the Juniper Research, Accenture is the most broadly focused one. Being a member of both the Ethereum Enterprise Alliance and the Hyperledger Project as well as entered into alliance with Ripple and Digital Asset. Early this year Accenture also joined the Chamber of Digital Commerce (CDC), the world’s leading blockchain trade association. The CDC, aimed to “help educate, promote and accelerate the adoption of blockchain-enabled technologies” , is also the founder of the Smart Contracts Alliance, the Blockchain Alliance, the Global Blockchain Forum amongst others.

Compared to IBM (Hyperledger Project and Digital Asset) and Microsoft (Ethereum Enterprise Alliance and Ripple) that are more outspoken in their vision, the overall goal of Accenture is to leverage DLT innovations of all sorts to make the technology viable for enterprise IT use.

“Accenture strives to be at the forefront of blockchain innovation and its practical, real world application. We provide our clients with a complete view of the blockchain-based technology landscape and its potential business implications. Our global team of experts works with each client to help build smart strategies around effective use-cases, investment and implementation.”Accenture website

“Accenture is committed to supporting these efforts by leveraging our expertise across the company – from regulation to innovation – to make blockchain a reality for our clients.” David Treat, managing director of Accenture’s financial services industry blockchain

Accenture: focus on security issues

Accenture is especially focusing on security issues. These will be critical to the widespread adoption of blockchain technology. In February this year Accenture launched its new blockchain security hardware solution and recently the company has secured a patent related to its work on Editable Blockchain technology as of late September 2017.

Blockchain Hardware solution

Last February Accenture launched its new blockchain security hardware solution. In partnership with Thales e-Security and its hardware security modules (HSMs), Accenture has developed a Hyperledger Fabric-based patent-pending solution…..

Read the full article of our expert Carlo de Meijer on LinkedIn

 

Carlo de Meijer

Economist and researcher

 

Blockchain hyperledger Project: Collaboration pays off

| 1-6-2017 | Carlo de Meijer |

Recently, I wrote that smaller blockchain consortia are needed. See my blog: Towards smaller and more focused blockchain consortia in  27 February 2017. The Hyperledger Project however may be the exception.

Umbrella

Things look quite good for the Hyperledger Project, described as being an “umbrella” for the developer communities to work on creating open source blockchain and related technologies. The Project receives even more interest from different organizations and industries than ever before since the start of this year. Their collaborative effort seems also to be paying off as the Hyperledger Project recently announced the upcoming release of its first production-ready blockchain: Fabric. And Hyperledger feels “there are still plenty of use cases waiting to be explored”.

The Hyperledger Project

Hyperledger Project is a global collaborative cross-industry effort created to leverage the emerging blockchain and distributed ledger technology. The Hyperledger project, that announced its first members in February 2016, has grown to more than 120, making it the largest blockchain consortium in the world today. These span various industries including finance, banking, technology, manufacturing, healthcare, and the Internet of Things, among several others, with big names such as IBM, Cisco, Intel, JP Morgan, Deutsche Bank, Wells Fargo, The London Stock Exchange and Accenture. Its latest members reflect all of these different areas as well, indicating the future for blockchain looks even more viable than ever before.
Hyperledger aims to enable its member organizations to build robust, industry-specific applications, platforms and hardware systems based on blockchain technology to support their individual business transactions by creating an enterprise grade, open source distributed ledger framework and code base. The goal is to advance blockchain technology’s use in business by developing both a cross-industry open standard and an open-source development library that would allow businesses to build custom distributed ledger solutions.

New Members

The Hyperledger Project continued its strong momentum in 2017. Early March Hyperledger announced that eleven new members have joined the project. The latest members include: Bank of England, Bitmark, China Merchants Bank, Federal Reserve Bank of Boston, Initiative for CryptoCurrencies and Contracts (IC3), Kaiser Permanente, Kubique S.p.A., MadHive, Monax, OSCRE and RadarWin Cyber Technology. Hyperledger also announced American Express and Daimler AG as Premier members earlier this year.
“Growth and interest in Hyperledger remain high in 2017. We’re now at 122 members and seeing even more diverse organizations across industry sectors invest their energy and resources in understanding how blockchain technology can strengthen their own business processes. This new set of members’ combined backgrounds and experiences will be invaluable to the community, as we strive to increase production deployments through this year,” Brian Behlendorf, Executive Director of Hyperledger, stated.

Central banks

Interesting is that now also The Bank of England and the Federal Reserve Bank of Boston are among the new members of the Hyperledger blockchain initiative. They are the first institutions of their kind to become part of Hyperledger, underlining the big interest of these institutions in the new technology. The Bank of England has already pursued a range of applications, including the potential issuance of a digital currency.

Working Group China

The Hyperledger Project, has now also set up a working group in China, mirroring the strong interest in the country. Hyperledger revealed that over 25% of Hyperledger members are from mainland China.
As a result, Hyperledger announced the Technical Working Group China (TWG China) to “help bridge and foster a working relationship between the global Hyperledger community with local technical teams in China”. The TWG China aims to facilitate interactions between Hyperledger members around the world and contributors and technical users in mainland China as well as other regional countries including Taiwan and Hong Kong. The Working Group is also tasked to grow the Hyperledger developer community in China by encouraging technical contributions to the project. TWG China will host and organize meetups, hackathons, training sessions and other community efforts to help push blockchain education, research and development.

Hyperledger Fabric

After the Technical Steering Committee (TSC) of the Hyperledger Project announced the promotion of its “Fabric” blockchain project to an active phase, early March, its first production-ready distributed ledger code base, was released at the end of last month.
“Hyperledger’s TSC agreed to grant the project team’s request to advance the Fabric’s status from Incubation to Active. As a reminder, we see Hyperledger as an “umbrella” for software developer communities building open-source blockchain and related technologies. Fabric falls under that umbrella and is the first of the five Incubator projects to graduate.”

Hyperledger Fabric is thereby the first project to graduate incubation to production-ready status. It was originally proposed by Digital Asset Holdings (DAH) and IBM as a result of the first hackathon during which a merge between the IBM’s proposal and DAH’s proposal was started. A group of developers from 20 different member companies has been instrumental in making the Hyperledger Fabric a reality.
“In the year since the project entered incubation, the diversity of contributors on Fabric-related projects has grown from nearly no diversity of contributors to 45 percent of the contributors – representing individual contributors or developers working for one of nineteen other companies, be they exchanges, banks, large ISVs or start-ups.” Behlendorf

The goal of Hyperledger Fabric is to supplement large-scale commercial operations of companies with a robust network. It is designed to enable confidentiality, scalability and security in business environments through a modular architecture. It allows components, such as consensus and membership services, to be plug-and-play. Fabric, will be utilized as the base protocol and platform for its member banks and companies looking to use blockchain technology in building both decentralized and private applications.

Various industry leaders and large corporations have expressed their interest to implement Hyperledger Fabric once the codebase is deployed and released. Community members including the London Stock Exchange, DTCC, and Fujitsu, said “they will allocate their resources in maximizing the potential of Hyperledger Fabric by showcasing its use cases in a wide range of applications”.

Loyyal Platform as an example

IBM Blockchain partner Loyyal became the earliest tester of Fabric and joined the Hyperledger Project soon after. They have built a handful of prototypes on Fabric, from the first release of Marbles to the most recent Fabric Composer release. And now they are building out an enterprise-grade loyalty platform utilizing Fabric and its newest features. Loyyal is thereby using blockchain and smart contract technology to reduce loyalty program operation costs through efficiencies and increase revenues through targeting capabilities. The Loyyal platform, built on blockchain, is transforming the loyalty and rewards industry by offering interoperability, multi-branded coalitions, superior liability management and dynamic issuance and redemption options.

 Other Hyperledger Projects

The Hyperledger Project has a special procedure to initiate blockchain projects. Any community member, contributor or partner company can propose blockchain projects or ideas to the Hyperledger Project and once approved, the development for the project will be pursued shortly after that. For Hyperledger projects like the Fabric to be deployed and introduced to the public, the foundation’s Technical Steering Committee (TSC) must unanimously agree that the codebase is production ready. The TSC thereby looks into the technical viability of the code, as well as its adaptability, flexibility, security and functionality to ensure that large-scale service providers will be able to utilize the blockchain technology without any boundaries.

Next to the Hyperledger Fabric, Hyperledger Project nowadays hosts multiple blockchain technologies. Hyperledger’s incubated projects include names like Blockchain Explorer, Cello, Iroha and Sawtooth Lake.

  • Blockchain Explorer

Hyperledger Blockchain Explorer is a “project in Incubation” that was proposed by IBM, Intel and DTCC to create a user-friendly web application for Hyperledger to view/query blocks, transactions and associated data, network information (such as name, status, list of nodes), chain codes/transaction families (view/invoke/deploy/query) and any other relevant information stored in the ledger.

  • Cello

A second project is Hyperledger Cello. This is a toolkit for deploying a Blockchain-as-a-Service, that reduces the effort required for creating, managing, and terminating blockchains. Hyperledger Cello aims to bring the on-demand “as-a-service” deployment model to the blockchain ecosystem, to provide a multi-tenant chain service efficiently and automatically, on top of various infrastructure, e.g., baremetal, virtual machine and more container platforms.

  • Iroha

Hyperledger Iroha is also a “project in incubation” that was proposed by Japan’s Soramitsu, Hitachi, NTT Data, and Colu. Hyperledger Iroha is a distributed ledger project that is designed to be simple and easy to incorporate into infrastructural projects requiring distributed ledger technology.

  • Sawtooth Lake

Hyperledger Sawtooth Lake is a modular blockchain suite. It supports both permissioned and permissionless deployments. Sawtooth Lake includes a novel consensus algorithm, Proof of Elapsed Time (PoET), targeting large distributed validator populations with minimal resource consumption. Transaction business logic is decoupled from the consensus layer into so-called transaction families that “allow for restricted or unfettered semantics”. Hyperledger Sawtooth Lake is contained in a single repository.

Hyperledger Project appears more promising

“Success of ‘clubs’ or consortia depends on the set up and governance, the stated aim, and also on the degree of alignment of interest of member organizations”. ”Models such as the open-source collaborative Hyperledger effort ultimately appears more promising when the aim is mainstream, commercial adoption”.Milan Salaba, partner at Deloitte

 

Carlo de Meijer

Economist and researcher

 

How about these Fintechs?!

| 9-2-2017 | Pieter de Kiewit | treasuryXL

In August 2016 our expert Pieter de Kiewit wrote an article about Fintechs and we thought it might be interesting to publish it on treasuryXL. Since then Fintechs have become a major subject in the financial world. What has changed since the article was written? Are the new solutions a reality now? What further developments do you see? Please feel free to share them with us.

 

In the late ’70s Sony introduced the Walkman. My marketing professor told me that, without market surveys, Sony hit the jackpot. Everybody wanted to have one. Snapchat, my niece, who is 17, understands what they offer, started in May 2012, the company was recently valued at $22 billion. This is beyond what my headhunter brain can digest.

Yahoo was bought by Google for a fraction of what the company was valued at a few years ago. In august 2016 Randstad Holding bought Monster (Monsterboard in The Netherlands) for €400 million. A decade ago Monster, then a multi billion $ company, told everybody they would dominate the recruitment industry forever and they tried to buy every available recruitment company.

How about these Fintechs? The market potential is huge, new solutions will pop up that will change our everyday life. In my opinion it is an extremely diverse group of companies. This market is extremely fragmented and in my perception many Fintechs have, in my perception, a hard time reaching their potential clients. What I notice is that the language of the Fintechs is not the language of the clients they want to sell their business to. The language they do speak is the capital raising language. When this capital staff is hired, product offerings are developed as well as marketing material. The banking industry observes, invests, initiates and wonders what to do. Companies like Google, Facebook, Amazon and others join in this Fintech jungle. Who will dominate in a few years, I can not predict.

Perhaps I am cynical, but I do not see any Snapchats or Yahoos. I hope this will change, because I think, next to banks, there is room for more innovative financial services companies. There are many good ideas out there. I wait for a finance Monster to step up and change market dynamics. Later on we will see if a Randstad will step in and if they will have a sustainable future. Time will tell…

Pieter de Kiewit

 

 

Pieter de Kiewit
Owner Treasurer Search

 

 

Do you want to read more articles about FinTech on treasuryXL?

B2B Fintech: Payments, Supply chain finance & E-invoicing guide 2016

Uitgelicht: Fintech – investeringen in financiële innovatie fors toegenomen.

Will the European banks strike back?

 

Blockchain, near real-world projects and collaboration: viable approaches

| 25-10-2016 | Carlo de Meijer |

blockchainIn one of my earlier blogs I wrote that we are beyond the hype of blockchain and distributed ledger technology. Support in the financial industry and beyond for this technology is accelerating in a rapid way. A lot of time and money is now invested into blockchain and its applications.

“Distributed ledger technology is set to move out of the test environment and into the wild next year, with nearly two thirds of banks expecting to be in production with full-scale, commercial blockchain projects by 2019”, according to recent research from IBM.

If so, that would mean much earlier than the 2020 to 2025 period that was earlier predicted for mass adoption of blockchain technology.

Collaborative near real-world examples

Financial institutions, technology companies as well as start-ups are increasingly collaborating on projects and pilots (or are planning to do so) to use distributed ledger/blockchain technology in trade finance, payments and securities. Next to existing platforms such as Ripple (payments), there is a growing number of collaborative initiatives including the Distributed Ledger Group (R3CEV) and the Hyper Ledger Project (Linux Foundation) (see earlier blogs). This could really accelerate the whole process towards mass adoption.

The first collaborative near real-world tangible use cases and practical applications of distributed ledgers  in the financial industry are now being brought to the open. And more are expected soon. Here follows a number of interesting examples of actual projects, initiatives and trials. Main question is: will they be viable in the long run?

R3CEV

Credit Suisse (syndicated loans)

Led by Credit Suisse and the bank-backed blockchain consortium R3CEV, a group of seven member banks (BBVA, Danske Bank, Royal Bank of Scotland, Scotiabank, Société Générale, State Street, US Bank and Wells Fargo) and a number of buy-side firms have started a new initiative to apply distributed ledger technology to overhaul “antiquated” and costly manual intervention in the global syndicated loans market. Goal is that in the future, syndicated loan data processing can be done exclusively on the distributed ledger, eliminating the cost for each market participant to maintain its own separate lending system. The Swiss bank is working with Synaps Loans (a joint venture created earlier this year through a partnership between smart contract vendor Symbiont and loan settlement platform provider Ipreo), on a proof-of-concept (PoC) which will run through the end of this year. Through Synaps, loan investors have direct access to an authoritative system of records for syndicated loan data. By connecting a network of agent banks through blockchain, faster and more certain settlements in the syndicated loans market can be achieved. This allows immediate savings by reducing manual reviews, data re-entry and systems reconciliation.

R3CEV and eight member banks (treasury bond trading)

Working under the R3CEV flag, a group of eight member banks have successfully tested a distributed ledger prototype for bond transactions. Thereby they used an implementation of Intel’s proprietary distributed ledger platform, Sawtooth Lake, for the trial. The platform featured advanced smart contract functionality, enabling trading, matching and settlement of US treasury bonds on-chain, as well as automated coupon payments and redemption based on network time and third party data sources. The partners used physical, non-cloud-based nodes hosted across the US, Canada, Asia, Australia and Europe to interact and simulate US treasury trading on the ledger. In addition, the technology enabled an on-chain identity registry to facilitate the permissioning of validators and transactors, and the association of those roles to different organisations. Intel is now donating the bond-related transaction families developed for the trial to the Hyperledger Project.

R3CEV and 15 member banks (Letter of Credit)

R3CEV and 15 of its consortium member banks successfully completed a number of prototypes using distributed ledger technology for trade finance purposes. The involved member banks in the trials (including Barclays, BNP Paribas, Commonwealth Bank of Australia, Danske Bank, ING Bank, Intesa Sanpaolo, Natxis, Nordea, Scotiabank, UBS, UniCredit, US Bank and Wells Fargo), designed and used so-called smart contracts on R3CEV’s Corda distributed ledger platform to process accounts receivable (AR) purchase transactions, invoice financing or factoring, and letter of credit (LC) transactions. Estimates suggest that “such technology has the scope to reduce operational and compliance costs of paper-based trade financing by 10 to 15% and provide a platform for banks to grow revenues by as much as 15%”.

R3CEV and 40 member banks (Commercial Paper trading)

R3CEV and 40 member banks have successfully completed a number of cloud-based ledger experiments. The (then!) 40 member banks were connected to five different R3CEV managed private distributed ledger technologies. Objective was to test, compare and evaluate the strengths and weakness of different blockchain offerings on the market today. The banks thereby modelled a series of smart contracts that were programmed to manage Commercial Paper transactions including facilitate issuance, secondary trading and redemption of Commercial Paper. Each of the distributed ledgers thereby ran a smart contract based on identical business logic to enable the banks to accurately compare the difference in performance between them. These experiments followed a test in January to unite eleven global financial institutions on a private distributed ledger provided by Ethereum.

Barclays and R3CEV (smart contracts repository)

The R3CEV blockchain consortium is working with Barclays Bank, ISDA and legal and academic bodies to explore the development of a repository of master templates for smart contracts when trading and managing securities on distributed and shared ledgers. The new group, has been set up to address the challenges of developing master templates for smart contracts, with an initial focus on how they could be implemented within existing legal and regulatory frameworks. Earlier this year, Barclays Bank demonstrated a Smart Contract Templates prototype creating an ISDA agreement and an interest rate swap trade that then executed as a smart contract on R3CEV’s Corda platform.

Credit Suisse and others (reference data management)

Coordinated by Credit Suisse and working with R3CEV and capital markets tech startup Axoni, seven buy-side and sell-side firms (including Citi and HSBC) have completed a multi-months proof-of-concept (PoC) exercise, which aimed to simplify reference data processes through a distributed ledger prototype. The prototype was created using proprietary distributed ledger software of Axoni (a distributed fintech solutions company) to simulate the collaborative management of reference data, as well as the use of that data for corporate bond issuance. Participants could interact with reference data after issuance, with any proposed changes requiring validation by the underwriter to ensure the ledger provided a single, immutable record of all data related to the bond. The results show how blockchain technology could be used to allow regulators and network participants to view in real time which parties on the ledger have created, issued and proposed amendments to the data record. “This may remove the need to reconcile multiple copies of data and help reduce duplicate reference data costs and improve data latency which will ultimately lower costs and reduce operational risks”, according to Credit Suisse.

Hyperledger Project

UBS and IBM (trade finance)

Swiss bank UBS and IBM  have designed a project that replicates the entire lifecycle of an international trade transaction on Hyperledger`s Fabric blockchain. The trade finance project that is still in its earliest stages and focuses on just a single aspect of the process, combines payment transactions, foreign exchange payments and more, into one single, elaborate smart contract. By programming that process into a smart contract on Hyperledger, UBS “expects to be able to cut the processing time down from seven days to one hour”. Besides the letter of credit process, the project also aims to incorporate the account opening process, to build a user-friendly interface “capable to operate on the go, from a transportation vehicle for example”. It remains unclear how long it will take to complete the international trade project, according to UBS.

CLS (payments netting service)

CLS, the multi-bank foreign exchange counterparty, is to build a payments netting service for trades settled outside the core membership thereby using distributed ledger technology based on the Hyperledger Fabric. CLS wants to use its position to standardise and expand bilateral payment netting capabilities for the entire FX market, eliminating intra-day liquidity demands caused by inefficient “bespoke” approaches to netting throughout the market. The company has signed up 14 banks as early adopters of the proposed service, which will accept FX instructions for six products, including non-deliverable forwards (NDFs), and 24 currencies over existing SWIFT-based channels. Participants will also have the option of connecting directly to the platform via a permissioned distributed ledger, administered by CLS using Hyperledger Fabric. CLS will be working with IBM to build new infrastructure. The new service will be delivered in a phased approach – subject to regulatory approval – beginning with a payment netting service for FX spot, forwards, NDFs, swaps, tomorrow/next day and same-day trades across the 18 currencies CLS currently settles, as well as the Chinese renminbi (offshore), Russian rouble, Polish zloty, Turkish lira, Thai baht and Czech koruna.

Bank of America Merrill Lynch/HSBC (Letter of Credit)

A bank consortium consisting of Bank of America Merrill Lynch, HSBC and the Infocomm Development Authority (IDA) of Singapore successfully applied distributed ledger technology to replace paper-based letters of credit (LCs) in trade finance transactions and streamline global trade. They thereby used the open source Hyperledger Project software for the prototype app, supported by IBM Research and IBM Global Business Services. By sharing information between exporters, importers and their respective banks on a private distributed ledger, this enabled them to execute a trade deal automatically through a series of digital smart contracts. The partners now plan to conduct further testing on the concept’s commercial application with selected partners such as corporates and shippers. Their challenge is to take this from concept to commercial use “making it quicker and easier for businesses to connect with new suppliers and customers at home and abroad.”

BTMU and IBM (contract management and trade finance)

The Bank of Tokyo-Mitsubishi UFJ (BTMU) and IBM are collaborating to use blockchain technologies for the design, management and execution of contracts among business partners. They thereby make use of the Hyperledger Project’s open-source platform to automate business transactions with each other on the IBM Cloud. Both partners have built a prototype of smart contracts on a blockchain that should improve the efficiency and accountability of service level agreements in multi-party business interactions. To help improve efficiency, the two will monitor delivery and usage of equipment with a sensor that embeds information into the blockchain. This will then automate invoicing and payment processes between the two companies. BTMU plans to begin using it to manage contracts within their business in fiscal year 2017.

JPX and IBM (post-trade settlement and proxy voting)

Officials of the Japan Exchange Group (JPX) and IBM Japan recently announced advanced plans to test the use of blockchain technology for post-trade settlement and proxy voting. The exchange will investigate how blockchain technology could be used to create new systems for the trading of low-liquidity assets. They thereby will use the framework provided by the Hyper Ledger Project. JPX is also working with Nomura Research Institute (NRI) and several major financial institutions (including SBI Securities, Mitsubishi UFJ Financial Group and blockchain specialist Currency Port) to test the use of blockchain technology for future applications across the securities industry. Until the end of June, the partners have examined various business scenarios and validation items involving distributed ledger technology and prepare prototype systems based on those scenarios.

Credit Mutuel Arkea (verify customer IDs)

Credit Mutuel Arkea has completed a pilot of an operational permissioned blockchain network to verify customer “bona fides” in compliance with Know Your Customer (KYC) requirements. Using the open-source Hyperledger Project fabric, the software “tapped into all valid existing evidence” already stored in the bank’s multiple systems of record such as from mortgage applications or life insurance enrolment and bank accounts opening. Following the success of the initial pilot, Credit Mutual Arkea plans to work with IBM to integrate the different silos of customer data across the bank to create a single ID data chain that can be used across all business processes.

Ripple

The Ripple network recently announced that seven banks including Santander, CIBC, UniCredit, UBS, ReiseBank, National Bank of Abu Dhabi and ATB Financial of Edmonton “had made a breakthrough by being among the first financial institutions in the world to move real money across borders using blockchain-based distributed ledger technology provided  by Ripple”. Focus is thereby on international, low-value, high-volume and velocity payments (as these can often be expensive and not profitable for banks). The seven banks are all planning to deploy Ripple commercially, while most having already moved real money via the network.

In the meantime Ripple has signed up several major banks to a steering group on the use of distributed financial technology for global payments (including names like: Bank of America Merrill Lynch, Santander, UniCredit, Standard Chartered, Westpac, and Royal Bank of Canada). The creation of the  Global Payments Steering Group (GPSG), is significant because this represents the first time that major banks have formulated policies to govern the transfer of money across borders using blockchain. The group will oversee the creation and maintenance of Ripple payment transaction rules, formalised standards for activity using Ripple, and other actions to support the implementation of Ripple payment capabilities. This Group might become a great competitor for SWIFT.

Standard Chartered (trade finance)

The first bank-developed blockchain platform for trade finance was the product of a partnership between Standard Chartered, the Development Bank of Singapore (DBS) and the Infocomm Development Authority of Singapore (IDA), the government’s IT and communications arm. They developed a blockchain-based invoice trading platform (code-named TradeSafe) that uses the distributed ledger technology developed by Ripple. Invoices and bills of ladings are allocated unique identifiers and stored on this distributed ledger. The use of unique identifiers enables users to view the status of a particular invoice/bill, but also reduces the risk of duplicate financing of the same invoice/bill. Further, to maintain confidentiality, users are allocated encrypted identities.

ATB Financial and Reisebank (international interbank payment)

SAP (the world’s third largest independent software manufacturer), partnered with Ripple and two banks, ATB Financial (Canada) and Reisebank (Germany), to demonstrate how banks can improve the efficiency of cross-border payments by using blockchain technology. For that SAP and Ripple designed and built a proof-of-concept (PoC) prototype based on this technology (thereby connecting SAP HANA Cloud, the open platform as a service (SaaS), and the SAP Payment Engine application, which centralizes payment processing in one solution with Ripple’s network of enterprise blockchain solutions).

This prototype was used to send the first international interbank blockchain payment of CAD $ 1,000 from ATB Financial to Reisebank. With parties representing different continents, this cross border payment transfer using blockchain technology was completed successfully. The payment which would normally have taken between two to six business days to process “was now completed in around 20 seconds, so nearly instantaneous”. In addition for being far quicker, this blockchain payment transaction cost a fraction of current transaction rates.

Japanese bank consortium (real-time settlement and domestic fund transfers)

A consortium of 15 Japanese banks are to work with blockchain joint venture SBI Ripple Asia, to build a new payments platform for 24 hours real-time settlement and domestic fund transfers, thereby using Ripple’s blockchain technology. This should firmly reduce the fees currently paid by banks for performing cross-border transactions and pave the way for the arrival of real-time domestic and cross-border payments. Initial participants include Bank of Yokohama and SBI Sumishin Net Bank (SBI Holdings owns part of it). It is expected that the size of the consortium will increase to 30 banks, and that the new service will go live in Spring 2017.

Santander (cross border payments)

Santander has become the first major UK bank (and the first bank in the world) to use Ripple for cross border payments. Starting in May Santander has begun piloting a Ripple-powered payments app built on the blockchain technology, that facilitates international payments. The app, currently being tested by bank staffers, connects to Apple Pay, and allows cross-border payments to be made between GBP 10 and GBP 10.000, around the clock and at any time of the day, using Touch ID. Funds appear in the recipient’s account the next working day. These transfers can be made from sterling to euros and US dollars (currently payments made in euros can be sent to 21 countries and US dollar payments to America only). The results of this trial will be used to assess whether to bring this technology to its customer base at a later date.

Foundational challenges

When it comes to blockchain, we may say that we are beyond the hype. The many experiments, proof of concepts and other real-world trials with blockchain technology are all evidence of that. And we will see many more of them this year and beyond. But quoting Terry Roche of Tabb Group in a recent blog the technology now needs to deliver real-world benefits.

“While blockchain’s promises remain bright, however, there are (still) numerous foundational challenges (process, technical, community, etc.) that the financial services industry needs to overcome to get a beneficial blockchain world.”

While all these projects ask a lot of investments, not all of them may prove to be viable in the end. The financial industry however has no endless funds available to explore endless options.  In today’s constrained technology marketplace, there needs to be a defined and realizable gain associated with any project for firms to fund it. That is why the industry should prevent dead-end options and only focus on viable applications that have a long-term future and suits best in their business model!

 

carlodemeijer

 

Carlo de Meijer

Economist and researcher

 

Blockchain and Hyperledger Hackfest: from another planet

| 17-10-2016 | Carlo de Meijer |

blockchainLast week I was invited to attend a Hyperledger Hackfest at ABN AMRO in Amsterdam. This event organized by the Hyperledger Fab led by IBM took place in the rooms of the bank’s new Innovation Lab, an ultra-modern environment. Certainly the right place for such a happening. Technical specialists and architects from companies and organisations all over the world from China to Japan and the US as well as Europe were participating.  

From another planet

For me as a ‘normal’ economist who thought to know a lot about blockchain and distributed  ledger technology, trying to bridge the gap between this technology and the financial world, this was sometimes different (and difficult) stuff. Just as if I was on another planet. But for many of them the other way around may also be true. The present financial world is often a complex one for these technical people. To realise that this technology should fit in this financial world they also need to understand what is happening there in other to bridge their gap. That means we should learn from each other in order to get the best of both worlds.

Blockchain platform Iroha

I have learned a lot at this event. But for this blog I like to restrict myself to an interesting offering that is a real example of such a cross-disciplinary research approach: the Japanese blockchain platform Iroha. One of the speakers from the Japanese fintech Soramitsu, was just returning from the Geneva SIBOS event where he had announced the open sourcing  and proposal of a blockchain network called Iroha to the Hyperledger Project (see my earlier blog about Hyperledger Project). Once the proposal is accepted by the Hyperledger Project and its members, Soramitsu will be able to collaborate with a wider range of partners and corporations in testing the network and finding easier methods in deploying blockchain networks to private companies.

What is Iroha?

Iroha, jointly sponsored by leading Japanese technology firms, including NTT DATA Corporation, is a distributed ledger technology and smart contract platform using Java-based smart contracts and a Byzantine Fault Tolerant consensus algorithm, called Sumeragi. This network is adapted from the Hyperledger Fabric architecture, with plans for greater interoperability in the future

Soramitsu intends to increase the availability of smart contract enabled networks to open opportunities for companies in using the blockchain technology. Iroha is expected to provide private businesses, financial institutions and organization with a simple blockchain architecture that is easy to understand, develop, and integrate. That will enable businesses of any size to implement its network with substantially lower costs, as well as run smart contract-based applications with improved security measures.

All of Soremitsu’s partnering institutions and research firms will support the development of Iroha, by running experiments on Iroha’s local currencies and the network’s overall efficiency.

Expected use cases for the Iroha blockchain network include: Payment and Settlement, Contract management, Securities clearing, Development of financial products such as Insurance, Supply Chain Management, Smart Grid, Trade finance, and Internet of Things (IoT), and efficient compliance with Know Your Customers (KYC) regulations.

Soramitsu collaborative approach

Soramitsu, started in February 2016, and a member of the Hyperledger Project, currently oversees various research projects and developments with Japan’s leading research institutions, technology and financial firms.

Weather derivatives

The company’s Iroha project can be implemented outside the realm of finance. Recently, Soramitsu began the development of derivative insurance contracts using blockchain technology, such as weather derivatives, together with the Japanese insurance company Sompo Japan Nipponkoa Holdings.

KYC

In addition, the company is working with Rakuten Securities to develop a Know Your Customer (KYC) using blockchain technology. They are now looking for global KYC partners.

Smart currencies

Soramitsu has also created a new joint research project with The University of Tokyo, The University of Aizu, and the Center for Global Communications (GLOCOM) of the International University of Japan to study the creation of local currencies running on blockchain and distributed ledger technology (Iroha network), so-called ‘smart currency”, and their  effects on regional development. This project will focus on the area around Aizu, in Fukushima Prefecture, Japan.

Thereby the University of Tokyo and its Interfaculty Initiative in Information Studies, Professor Hideyuki Tanaka researched the effects of network economics and information technology (IT). The University of Aizu OpenAppLab and regional technology center looked into the relationships of local smart currencies to solve regional problems. Lastly, GLOCOM, who founded the Blockchain Economics Research Lab back in March 2016, focused its efforts on socio-economic systems and the impact of distributed ledger technology.

Blockchain and cross-disciplinary approach

What may we learn from this? Intensive collaboration between the financial and the technology world is a must. This in order to meet the needs of both worlds. The Hyperledger Project is already a platform where all these disciplines come together. Given its open-source approach this gives the best guarantee to make further progress. It is no up to the regulators to make that a reality!

carlodemeijer

Carlo de Meijer

Economist and researcher

Should SWIFT be afraid of blockchain technology?

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Blockchain and the Hyperledger project: beyond the hype

| 27-09-2016 | Carlo de Meijer |

blockchainWho is not yet convinced of the potential of blockchain? Here is another example that shows blockchain is beyond the hype. Early September, the Hyperledger Project, a collaborative cross-industry effort to advance blockchain technology, announced that 17 new companies and organisations have joined, bringing the total number of members to more than 80. And expectations are that this number will see a further growth, to beyond 100 at the end of 2016.

Let’s have  a look how this collaboration platform performed! But first, what is the Hyperledger Project, and what is their goal?

What is the Hyperledger Project?

As they describe themselves on their website:

“The Hyperledger project is an open source collaborative effort created to advance blockchain technology by addressing important features for a cross-industry open standard for distributed ledgers. It is a global collaboration including leaders in finance, banking, Internet of Things, supply chains, manufacturing and Technology. The Linux Foundation hosts Hyperledger Project as a Collaborative Project under the foundation”.

Goal
Main goal is to build an enterprise grade, open source distributed ledger framework and code base to drive blockchain innovation. This should enable organisations to build and run robust industry-specific applications, platforms and hardware systems to support their individual business transactions. All of these innovations will work with an open-source code and distributed ledger architecture.

Through the creation of a framework that integrates different components for different use cases, the consortium is seeking to bring cohesion to a number of independent blockchain efforts that are in the process of developing protocols and standards. The collaboration should help identify and address important features and currently missing requirements for a cross-industry open standard for distributed ledgers.

Codebases
The Hyperledger Project is made up of different codebases donated to the Linux Foundation, contributed by several of its members including IBM, Digital Asset Holdings, Blockstream, Ripple and others to further the Project goals. IBM alone donated 44.000 lines of codes. In total, there are now 160 code contributors (including individuals that may not be working on behalf of any company). It provides a vehicle for companies to collaborate on features.

Members
The Hyperledger Project has gained a lot of industry support in advancing blockchain technology. Since its formal launch in February this year, with original 30 founding members, this number jumped to 80 in  a half year time.

New Hyperledger members thereby come from all over the world, including Europe, the US and Asia. They have joined a rapidly growing and diverse group across various industries, including finance, banking, trade finance, supply chain management, manufacturing, technology etc.

The Hyperledger Project has backing from many big corporates. Amongst its members there are a large number of established names from technology giants like IBM, Intel, Cisco, Accenture; to financials with names as JP Morgan, BNY Mellon, ANZ Bank, HSC, Wells Fargo; exchanges such as London Stock Exchange, Deutsche Borse, organisations like SWIFT, CLS, DTCC, Digital Asset Holdings, as well as the bank-backed blockchain consortium R3CEV.

Incentives
Why are they all joining the Hyperledger Project?
There are various motivations and reasons why companies are joining this Project. But in general, Hyperledger is seen by many as being “at the cutting edge of blockchain”. Major institutions are increasingly viewing the Hyperledger Project as a venue for further engagement. International collaboration cross-industry, organised effort plus local experience are thereby looked at as key to ensuring the scalability and the adoption of distributed ledger technology.

For them the Hyperledger Project is uniquely positioned to foster the collaborative approach needed in order to advancing the blockchain ecosystem and promoting blockchain’s extensive application to serve as the future credible infrastructure. They hope, by working with this growing community, to further Hyperledger’s vision and open blockchain development efforts. This by sharing ideas, experiences, expertise and knowledge in an effort to bring blockchain’s emerging technology to market

“A key factor of the project’s success will be member expertise and guidance” – Brian Behlendorf

Recent developments

The Hyperledger project has been rapidly moving forward since the start. Next to the announcement of a growing number of organisations joining their collaborative platform, we have seen a number of interesting developments surrounding the Hyperledger Project.

Election Technical Steering Committee
The governance structure has been further strengthened. The Hyperledger Project recently elected a new Technical Steering Committee (TSC) consisting of 11 members. The members include representatives from names like R3CEV (the other blockchain consortium), Digital Asset Holdings, IBM, London Stock Exchange, and DTTC. The composition of this TSC reflects the importance of these players in the Hyperledger Project, from both a technology as well as a business point of view.

Hyperledger Project and SIBOS Innotribe
Hyperledger Project announced it will sponsor the Innotribe Networking event at Sibos 2016, on Wednesday, September 28.  The conference will be held on September 26-29 at PALEXPO in Geneva. As the world’s premier event for financial services, Hyperledger Project is  looking forward to discussing open source distributed ledger technology and its potential to transform the industry with leading companies and experts.

Trade Finance Proof of Concept
The Hyperledger Project as well as the bank-backed blockchain consortium R3CEV announced initiatives to develop blockchain prototypes for trade finance innovation on the same day. Both initiatives were exploring how distributed ledger technology could streamline the existing old-fashioned, paper-based and expensive world of trade finance, using letters of credit. They thereby tried to tackle trade financing challenges via this technology.

Hyperledger Project trade finance proof of concept
The Hyperledger Project trade finance proof of concept comprised HSBC, Bank of America Merrill Lynch and IDA (Singapore). Aim of the various parties was to use a blockchain prototype to streamline global trade. The application mirrors a paper-intensive letter of credit (LC), whereby participants could execute a trade deal automatically through a series of digital smart contracts. They thereby used the open source Hyperledger Project blockchain fabric, thereby supported by IBM Research and IBM Global Business Services.

R3CEV blockchain trade finance initiative
R3CEV and 15 of its blockchain consortium members have “successfully” completed two prototypes using distributed ledger technology for smart contracts. The banks designed and used so-called smart contracts on R3’s Corda distributed ledger platform to process accounts receivable (AR) purchase transactions, invoice financing or factoring, and Letter of Credit (LC) transactions.

The involved member banks in the trials include: Barclays, BNP Paribas, Commonwealth Bank of Australia, Danske Bank, ING Bank, Intesa Sanpaolo, Natxis, Nordea, Scotiabank, UBS, UniCredit, US Bank and Wells Fargo.

Competition or collaboration?
HSBC, involved in the Hyperledger Project trade finance PoC, but also member of the bank consortium R3CEV, asked if there was no duplication, and if so, expressed the view that “we will all have to come together, because this has to be industry-led”.

According to HSBC “… now we need to get the technical teams together to understand the pros and cons, because part of what we have learned is also the technical limitations of distributed ledgers, in terms of the number of nodes you can have or the quantity of data you can have on it. So now may be the time to share those and see how we can put our heads together to take this to next level.”

“R3 is a member of the Hyperledger initiative and as such we will continue to explore ways to utilise the code being developed by its open source community in the real-world products we are developing with our consortium members”, said HSBC.

Hyperledger hackaton Amsterdam
ABN Amro, IBM, Holland FinTech and Linux Foundation are to run the first-ever Hyperledger hackaton, inviting coders to develop new financial applications capable of running on distributed ledgers. This one-and-a-half day hackaton will take place on 11-12 October in Amsterdam and is open to developers, tech students and fintech companies that are experimenting with blockchain technologies.

Hyperledger Project to address academic lecture ISITC
Leading members of the Hyperledger blockchain Project will address the European branch of ISITC, the International Securities Association for Institutional Trade Communication. The academic lecture to be held at the London Metropolitan University is intended to give the members an idea of what differentiates the Hyperledger Project from other blockchain projects.

This event that will be held in London is the latest effort by ISITC’s newly formed Blockchain DLT Working Group to lay the foundation for a global effort to standardize distributed ledger technology. The DLT Working Group that emerged earlier this year was invited to create a list of 10 blockchain standards for future development. It has changed its task slightly to focus on a cross-industry framework from which a modified list of benchmarks might eventually emerge. The Working Group prioritised working with other standards bodies and consortia like the Hyperledger Project to minimise overlap.

Hyperledger Project “ Blockchain Explorer “
As more companies like Bank of America and HSBC begin to unveil proofs-of-concept (PoC) using the Hyperledger protocol, a more standardised way to search its data is just part of what it will take to scale. Even beyond building out standards, creating common codes may allow organisations to focus on creating industry-specific blockchain applications.

The Hyperledger Project is now building an open-source tool that will let anyone explore the distributed ledger projects being created by its members. Instead of overlapping efforts and of launching competing open source services, unified effort emerged the blockchain explorers being developed by the likes as IBM, Intel and DTCC. The joint project has been named the “Hyperledger Explorer”. Creating common code will allow organizations to focus on creating industry-specific applications that enhance the value of this technology.

This tool would make it easier to learn about Hyperledger from the inside, while still protecting the privacy. When completed, the Hyperledger Explorer is expected to give Hyperledger developers and non-technical users access to block information, transaction data, network information (such as a list of nodes) and chain codes or transaction families. The Board and the recently newly formed Technical Steering Group will be working on these code proposals in the coming period.

Standardisation

The Hyperledger Project thinks it is still too early to strive for a technical standard for a general purpose inter-chain communication protocol (or even data format). Instead, they would like to encourage the different ongoing proposals to converge towards common architectures and or/even common tech stacks or set of reusable modules. This could serve as the starting point for the development of standard APIs, enabling the inter-chain communication and thus start the discussion around the technical realisation of such a protocol. Parts of this common code could also be reused by other projects, thus contributing to a standardisation of the blockchain technology overtime.

carlodemeijer

 

Carlo de Meijer

Economist and researcher