Daily Management Review

Blockchain Platform Allows Confidential Trades, says Digital Asset


12/08/2016




Blockchain Platform Allows Confidential Trades, says Digital Asset
Digital Asset Holdings has developed a platform to allow traders to use blockchain technology without giving out confidential information on their trades, announced the  blockchain startup that is backed by some of the world’s largest banks.
 
According to a report issued by the company, which is led by former JPMorgan banker Blythe Masters, the new platform provides a solution to confidentiality issues holding back adoption of the nascent technology in financial markets.
 
Blockchain is a shared record of transactions and asset ownership that is maintained by a network of computers on the internet and it was first emerged as the software underpinning cryptocurrency bitcoin. This means every user on a network could potentially have access to the details of every transaction.
 
This aspect of blockcahin makes it inadequate for use in certain securities markets where participants would be at a disadvantage if they disclosed their positions even as this reduces risks associated with discrepancies in data records held by different firms.
 
The distributed ledger of block chain transactions were divided into two components and this was basis of the Digital Asset’s platform solving the privacy issue. These two components were one that is shared by all participants without the confidential data, according to the report and the other is one where participants can confidentially store their transactions data.
 
Digital Asset said that it is building for financial institutions including Australian stock exchange ASX and U.S. post trade services provider the Depository Trust and Clearing Corporation and the new platform will form the basis of the technology that is being prepared by the company for these companies.
 
A contract to replace ASX’s clearing and settlement systems with its blockchain based software was awarded to the company earlier this year. by the end of 20007, Digital Asset’s platform will be ready for use. According to Dan O’Prey, Digital Asset Holdings' chief marketing officer, any decision by ASX to use it would be made thereafter in consultation with their stakeholders.
 
"This is the output of two years of hard work and confronting production requirements," O’Prey reportedly told Reuters.
 
The blockchain technology has yet to be deployed to run large financial processes such as the clearing and settlement of equities markets even as enthusiasm around blockchain in financial markets has exploded over the past year.
 
Research firm Greenwich Associates found that transaction confidentiality was their top security concern, with 56 percent of respondents citing it as their primary worry in a poll involving more than 130 executives working on blockchain in capital markets in June.
 
According to the company, Digital Asset's technology could be implemented in a given market without the need for all participants to be running on a blockchain based system, a way to interact with existing financial protocols, apart from solving the confidentiality issue.
 
In the nascent blockchain industry, Digital Asset is one of the most high profile startups and is based in New York and was founded in 2014. Earlier this year it raised more than $60 million from large financial institutions including Goldman Sachs, JPMorgan, CME Group, Deutsche Borse and Citigroup.
 
(Source:www.reuters.com) 






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