Microsoft, Goldman, Cboe Team Up For Blockchain For Institutional Crypto Assets

Blockchain concept of a transparent cube with encryption data code and network.
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Goldman Sachs (GS), Deloitte, Cboe Global Markets (CBOE), Microsoft (MSFT) and fintech firm Digital Asset have teamed up to create a blockchain network that will help execute financial product smart contracts for institutional crypto assets while maintaining security and regulatory requirements.

Key Takeaways

  • Goldman Sachs, Deloitte, Cboe Global Markets, Microsoft and Digital Asset are working together to create a blockchain network for institutional crypto assets.
  • Canton Network will allow different applications built on Daml, a smart contract language developed by Digital Asset, to interact and allow asset exchange.
  • Unlike permissionless public blockchains like Bitcoin and Ethereum, Canton Network will operate more similarly to a permissioned blockchain, as individual users will need to gain access via a participating financial intermediary.

What is Canton Network?

The Canton Network is based on Daml, a smart contract language developed by Digital Asset, and Canton, a scalable and privacy-enabled blockchain platform. The network aims to create a decentralized infrastructure that allows different applications built with Daml to interact and synchronize assets, data, and cash across previously siloed systems in financial markets.

For example, the network can facilitate an atomic swap transaction between digital bonds and digital payments across separate applications, ensuring simultaneous exchange without reconciliation.

Similarly, the network can enable collateralized financial transactions using digital assets across different applications. The network aims to capture the benefits of public blockchains without the perceived flaws, such as lack of privacy and an inability to scale, that have to be avoided at these sorts of heavily-regulated institutions.

Its a Blockchain, But Not Entirely Decentralized

Unlike other blockchains that replicate the same data across all nodes on the network, Canton Network's security and privacy comes from the fact that transactions are verified only by the participants involved in the transactions. Every node on the network only has information on a need-to-know or allowed-to-know basis.

Public blockchains like Bitcoin and Ethereum are permissionless, but the Canton Network will operate more similarly to a permissioned blockchain, as individual users will need to gain access via a participating financial intermediary

While these sorts of permissioned blockchains are often criticized by proponents of public, permissionless networks, the reality is extreme decentralization may not be needed for these sorts of regulated assets. However, in the past, a number of other similarly-constructed blockchains, such as Meta's Diem initiative, have failed for a variety of reasons.

The Canton Network has been operating for a while with limited access for its participants such as ASX, BNP Paribas, Broadridge, Cboe Global Markets, Cumberland, Deloitte, Deutsche Börse Group, Digital Asset, Goldman Sachs, Microsoft, Moody’s, Paxos, S&P Global, SBI Digital Asset Holdings, and Umbrage.

"As of early 2023, financial institutions transact over $50 billion daily on limited-access subnets of the Canton Network," Digital Asset said in its Canton Network whitepaper.

Article Sources
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  1. Business Wire. "New Global Blockchain Network of Networks for Financial Market Participants and Institutional Assets."

  2. Digital Asset. "Canton Network: A Network of Networks for Smart Contract Applications."

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