Fortune: Chain CEO - Beware of blockchain hype

Crazy commentary : Adam Ludwin, CEO of blockchain company Chain, believes that the hype of blockchain has made people forget what the technology was originally used for. Blockchain is a database of currency. The core function of blockchain is to replace the banking system and turn currency into a real digital asset technology, because the process used by banks to record financial transactions is very slow. Online communication allows all parties to reach a consensus on transactions within seconds, such as transaction shares or fund transfers, but the background process of recording these transactions still takes several days.

Translation: Nicole

Blockchain serves the purpose of currency.

It’s strange to hear a CEO pour cold water on his company’s core technology, right? That person is Adam Ludwin, CEO of blockchain company Chain, who I met last month.

Ludwin believes that the hype around blockchain – a new form of bookkeeping that relies on a shared digital ledger – has made people forget what the technology was originally used for.

He said:

“Blockchain is a database for money, and I don’t know why people are talking about its use in medical records, homes, and voting systems.”

The comments refer to recent headlines that blockchain-based tools will revolutionize the way land registries and legal contracts are signed.

Specifically, Ludwin knows that in theory, blockchain can accomplish these tasks. But he also believes that these use cases obscure the core role of blockchain. He believes that blockchain is a technology used to replace the banking system and turn currency into a real digital asset.

Ludwin recently told the world’s central bankers why they should embrace blockchain technology, which he believes is poised to disrupt institutions such as SWIFT, the global interbank messaging network, and clearing houses because of the slow processes these institutions use to record financial transactions.

He noted that online communications allow parties to reach consensus on transactions, such as trading shares or transferring funds, within seconds, but the back-end processes to record these transactions can take days.

Ludwin said:

“Institutions that only handle data information in a custodian role are the ones that will be most impacted by blockchain, and the data layer is the one that is truly at risk.”

So what's the value of Ludwin's company? Chain, which has raised $44 million in funding, says its company is creating software that can help the financial industry replace the current information storage. Ludwin believes that money itself will eventually become a true digital asset, and banks will use blockchain to send assets - rather than just record the transfer of these assets with information.

Chain, which has developed a blockchain protocol for Visa, Capital One and other large financial players, is not the only company in the field. Other large players include R3, a New York-based company that is building blockchain standards for dozens of banks, and Digital Asset Holdings, which is working to restructure the back office of the Australian Stock Exchange. Technology players like IBM are also entering the blockchain field.

But Ludwin said Chain stands out because it is a Silicon Valley technology company that focuses on technology, unlike R3. He believes that Chain is similar to companies like HortonWorks and Cloudera, and can provide examples for building next-generation databases and networks.

So how do we know Chain won’t succumb to the blockchain hype that Ludwin criticizes? I ask him, and Ludwin looks impatient. He says the series of press interviews in August may be the last for a while, and his next public appearance will be to showcase the product. So stay tuned!