Goldman Sachs (GS), Deloitte, Cboe Global Markets (CBOE), Microsoft (MSFT) and fintech company Digital Asset have teamed up to create a blockchain network that will help implement smart financial product contracts for institutional cryptoassets while maintaining security and regulatory requirements.
Key things
- Goldman Sachs, Deloitte, Cboe Global Markets, Microsoft and Digital Asset are working together to create a blockchain network for institutional cryptoassets.
- Canton Network will enable various applications built on Daml, a smart contract language developed by Digital Asset, to communicate and enable asset exchange.
- Unlike permissionless public blockchains such as Bitcoin and Ethereum, the Canton Network will function similarly to a permissioned blockchain in that individual users will need to gain access through a participating financial intermediary.
What is Canton Network?
Canton Network is based on Daml, a smart contract language developed by Digital Asset, and Canton, a scalable privacy-enabled blockchain platform. The network aims to create a decentralized infrastructure that allows various applications built with Daml to interact and synchronize assets, data and cash across previously secret systems in financial markets.
For example, the network can facilitate atomic exchange transactions between digital bonds and digital payments in different applications, ensuring simultaneous exchange without reconciliation.
Similarly, the network can enable secure financial transactions using digital assets across different applications. The network aims to capture the benefits of public blockchains without the perceived drawbacks, such as lack of privacy and inability to scale, that should be avoided with these kinds of heavily regulated institutions.
It’s a blockchain, but not fully decentralized
Unlike other blockchains that replicate the same data across all nodes in the network, the security and privacy of the Canton Network is based on the fact that transactions are verified only by the participants who participate in the transactions. Each node in the network has information only on a need-to-know or permitted-to-know basis.
Public blockchains like Bitcoin and Ethereum are permissionless, but the Canton Network will function similarly to a permissioned blockchain, as individual users will need to gain access through a participating financial intermediary.
While these species enabled blockchains are often criticized by proponents of permissionless public networks, the reality is that extreme decentralization may not be needed for these kinds of regulated assets. However, in the past, a number of other similarly constructed blockchains, such as Meta’s Diem initiativethey failed for various reasons.
Canton Network has been operating for some time with restricted 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.
“By early 2023, financial institutions will be transacting over $50 billion a day on Canton Network’s restricted access subnets,” Digital Asset said in its Canton Network whitepaper.
