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Open source unleashes blockchain's enterprise potential

Fahmida Y. Rashid | Dec. 18, 2015
Move over, bitcoin -- the Linux Foundation has big plans for an open distributed ledger system to track and record all sorts of transactions beyond currencies.

Open source unleashes blockchain's enterprise potential
Credit: Deavmi

Blockchain technology makes cryptocurrency like bitcoin possible, but it has a lot of potential beyond tracking currency transactions. The Linux Foundation wants to tap into that potential and is spearheading a collaborative effort to develop an enterprise-grade open source distributed ledger called Hyperledger.

At its core, blockchain is a record-keeping system running across a global network of independent computers. The distributed ledger, which records and verifies transactions, is write-only -- that is, transactions cannot be tampered with or modified after the fact, so virtually anything of value can be tracked and traded using this system.

"This project has the potential to become a foundational technology -- one that is used in a wide variety of applications across all major industries," said Jim Zemlin, executive director at the Linux Foundation.  

Some of the biggest tech companies and financial services players have joined this project as founding members, including ANZ Bank, Cisco, CLS, Credits, Digital Asset, Fujitsu, IC3, IBM, Intel, London Stock Exchange Group, Mitsubishi UFJ Financial Group, State Street, SWIFT, VMware, and Wells Fargo. These members are investing "considerable research and development efforts" to the project, the Linux Foundation said.

It makes sense that financial institutions are betting on blockchain, since the sector would be among the first to benefit from a widespread use of the technology. However, the fact that players like IBM, Cisco, Intel, and VMware are involved show that interest in blockchain goes well beyond finance. IBM has committed to contributing tens of thousands of lines of existing code, significant intellectual property, and full-time developer resources, the Foundation said.

Digital Asset, the company that originally developed Hyperledger as distributed ledger technology providing real-time institutional settlement, contributed the name to the project, along with enterprise-grade code and developer resources.

Blockchain's potential

Blockchain is designed to provide a secure, transparent, and reliable way of tracking transactions, and most important, the process is largely automated. There is a lot of interest in financial markets on ways to take advantage of blockchain beyond bitcoin. Leading banks are investing $1 billion in blockchain-related projects, according to a recent report from Magister Advisors, and the Securities and Exchange Commission recently approved a plan from online retailer Overstock.com to issue its stock via blockchain (it already used the blockchain to issue private bonds). Nasdaq OMX, the company behind the NASDAQ stock exchange, wants to use blockchain to oversee trades in private companies.

"If you've got an incredibly powerful record-keeping system, one of the best uses for it [blockchain] is to track transactions," said Nicholas Thorne, co-creator of Blocksign, an application that uses blockchain to legally sign documents, contracts, and agreements.

 

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