Blockchain: The Chain Open Standard

Nasdaq MarketInsite 

As financial institutions have set about to unleash the technology behind Bitcoin – Blockchain, the issue of privacy for financial clients is front and center. The blockchain technology essentially is a transparent ledger of financial transactions. These transactions are maintained on global servers throughout the world – not on one central server. 

Working with financial firms, San Francisco-based Chain has published a new open source protocol that can securely, privately and rapidly process transactions in large volumes. This new protocol provides financial services companies with the necessary privacy for their client base while maintaining the security and speed associated with blockchain. This new protocol can process tens of thousands of transactions per second. This gotal is to be faster and more scalable than the Bitcoin blockchain.

The Chain Open Standard has been a collaborative effort by leading global financial firms with the startup. Working together with Silicon Valley engineers, cryptographers, and data scientists, the team's efforts include use cases from the world of finance. Nasdaq has invested in Chain and has been joined by other firms such as Visa, FirstData, Fiserv, Citi, CapitalOne, MUFG, State Street, Fidelity, and Orange.

Features of the Chain Open Standard include Assets, Smart Contracts, Privacy, Metadata, Data Model, Consensus and Privacy. The company notes its open source protocol Privacy feature "is designed to support selective disclosure of sensitive information. This is accomplished with three complementary techniques: one-time-use addresses, zero knowledge proofs, and encrypted metadata."

For Privacy, a one-time-use address is created each time an account holder wishes to receive assets. These differing addresses prevent other observers of the blockchain from associating transactions with each other or with a particular party.

To conceal the contents of a transaction, the Chain Open Standard is incorporating a technique known as “zero knowledge proofs,” which cryptographically conceals the assets and amounts in a transaction, while allowing the entire network to validate the integrity of the contents. Only the counter-parties (and those granted access) can view the details of the transaction.”

In a Forbes article, Chain chief executive officer, Adam Ludwin, stated, “The reason you build something new is that you have a set of design rules that are distinctive. When we started, we were happy to use [an existing protocol] off the shelf, but nothing that we found met the design requirements of our partners…. And those key requirements were that it needs to be really scalable, very high scale, very fast. We need to have privacy of data. We need to have what is usually called a ‘permissioned’ network” — as opposed to the Bitcoin network, which anyone can join.”

Brad Peterson Nasdaq chief information officer added, “Nasdaq has been pleased to participate in the development of the Chain Open Standard through a variety of use cases, including private market securities, proxy voting and clearing.”

 

Nasdaq’s partnership with Chain has produced the launch of a blockchain product, called Nasdaq Linq. Linq is a trading platform for pre-IPO companies used by the NASDAQ Private Market. Other initiatives include am e-Residency platform in cooperation with the Republic of Estonia. It will facilitate a blockchain-based e-voting service that allows shareholders of companies listed on Nasdaq’s Tallinn Stock Exchange to vote in shareholder meetings.

Learn more about Chain Open Standard at Chain.com.