Goldman Sachs (SG), Deloitte, Cboe Global Markets (CBOE), Microsoft (MSFT) and fintech company 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 based on Daml, a smart contract language developed by Digital Asset, to interact and enable the exchange of assets.
- Unlike public permissionless blockchains like Bitcoin and Ethereum, the Canton Network will function more similarly to a permissioned blockchain, as individual users will need to gain access through a participating financial intermediary.
What is Red Canton?
Canton Network is based on Daml, a smart contract language developed by Digital Asset, and Canton, a privacy-enabled and scalable 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 in previously isolated systems in financial markets.
For example, the network can facilitate a atomic swap transaction between digital bonds and digital payments through separate applications, ensuring simultaneous exchange without reconciliation.
Similarly, the network can enable secured financial transactions using digital assets in different applications. The network aims to capture the benefits of public blockchains without the perceived flaws, such as a lack of privacy and inability to scale, that should be avoided in these types of heavily regulated institutions.
It's a blockchain, but not fully decentralized
Unlike other blockchains that replicate the same data across all network nodes, the security and privacy of the Canton Network comes from the fact that transactions are only verified by the participants involved in the transactions. Each node in the network only has information on a need-to-know or authorization-to-know basis.
Public blockchains like Bitcoin and Ethereum are permissionless, but the Canton Network will function more similarly to a permissioned blockchain, as individual users will need to gain access through a participating financial intermediary.
While this kind of permissioned blockchains often criticized by advocates of permissionless public networks, the reality is that extreme decentralization may not be needed for these types of regulated assets. However, in the past, a number of other similarly built blockchains, as the initiative Diem de MetaThey have failed for a variety of reasons.
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 Bรถrse Group, Digital Asset, Goldman Sachs, Microsoft, Moody's, Paxos, S&P Global, SBI Digital Asset Holdings and Umbrage.
"As of early 2023, financial institutions are transacting more than $50 billion daily on limited-access subnets of the Canton Network," Digital Asset said in its Canton Network whitepaper.
