IBM and banking giants abandon Bitcoin to build new blockchain

According to Wired magazine, several giant companies from the financial and technology industries, including IBM, Intel, Cisco, London Stock Exchange Group, JPMorgan Chase, Wells Fargo, and State Street, have joined a group called the Open Open Ledger Project Project to build an alternative chain to the Bitcoin blockchain.

The open-source project, which will be overseen by the nonprofit Linux Foundation, aims to build a technology similar to the bitcoin blockchain that can bring a high degree of automation and transparency to services in the business world, including stock exchanges and other financial markets.

These companies are creating a new distributed ledger rather than embracing the Bitcoin blockchain itself.

“Blockchain is a great design pattern right now,” said Jerry Cuomo, vice president and chief technology officer of IBM Software Group. “Now, how do we apply it to business? What are the keys to doing that? That’s what this group is thinking about.”

Blockchain is essentially a database that spans a global network and is maintained by independent machines. This database is not controlled by a single entity, but can still reliably track the transactions of assets. With Bitcoin, blockchain can track the transactions of money. But it can also be used to track anything that carries value, including stocks, bonds and other financial securities, as well as assets like houses and cars. In recent months, several projects have seized on the possibilities of blockchain.

Nasdaq OMX, the company behind the Nasdaq stock exchange, is using blockchain to manage transactions in the private equity market, while online retailer Overstock has also built a trading system through their TØ platform that allows companies to issue or borrow securities through the blockchain. Just last week, the U.S. Securities and Exchange Commission approved Overstock's blockchain stock plan.

IBM and Digital Asset Holdings (DAH), a company led by Wall Street CDS queen Blythe Masters, are exploring similar technologies, and both companies are currently participating in the open ledger project.

Other participants include technology companies富士通, VMware ,日本三菱UFJ金融集团and SWIFT . IBM led the creation of the organization, and earlier this year the tech giant said it would open source its bitcoin project code, which will serve as part of the foundation for the open ledger project.

Build your own blockchain

Marley Gray, head of Microsoft's blockchain project, said that blockchain technology promises to provide a more secure, reliable and transparent way of trading, including currency, securities and other assets. It allows you to trade assets as easily as sending an email. You don't need to trust someone or an organization, which can remove expensive middlemen.

People like Gray and Overstock CEO Patrick Byrne believe that blockchain can fill holes in the financial trading market. All of these features could potentially be applied to the open ledger project, which Cuomo says could streamline the trading of cars, track supply chains and oversee the vast amounts of data generated by environmental audits.

It is significant, however, that IBM and its cohorts created a new distributed ledger rather than embracing the Bitcoin blockchain itself. Like the open ledger project, the Bitcoin blockchain itself is open source, meaning its code is freely available to everyone in the world and anyone can contribute to the project. But by creating a new open source project, a giant company like IBM can put itself at the center of the project. Open source means giving something away, but sometimes self-interest can trump generosity. An open source project can compete with another open source project, or refine its ideas, or take those ideas in another direction.

In fact, some companies involved in the project may feel the threat of Bitcoin blockchain to the financial market. For example, if the bank uses Overstock's technology to borrow stocks, it will be the failure of the bank. In the United States, the stock loan business is a $954 billion market, and State Street Bank, known as the agent lender, is an important part of this market, and the future of this bank will depend on this game.

Keeping blockchain open

Take the Linux Foundation, for example. The foundation is widely respected in the tech world as an organization that truly understands how to run open source projects, in which many participants have a say.

But in this open ledger project, only IBM and DAH have vowed to promote the existing code (DAH acquired the company "Hyperledger", and Hyperledger may be used for the project's name in the future). But Jim Zemlin, head of the Linux Foundation, reiterated that the project is ready for broader cooperation. "We have a lot of confidence in this process," he said.

“Like networks, there’s not one thing to rule them all,” said IBM’s Cuomo. “There’s not one blockchain to rule them all. There are going to be many implementations. It would be a sin if they didn’t interoperate.”

A competitor to Bitcoin?

Of course, IBM is not the first to take this approach. Other companies, including Ripple, have also taken a new approach to creating alternative blockchains (distributed ledgers), and although these projects are separate, Ripple has built a core protocol that allows multiple ledgers to communicate with each other.

To some extent, this open ledger project will be a competitor to the Bitcoin blockchain, as well as to existing blockchain technology systems, such as Patrick Byrne's T0 platform. But Byrne himself appreciated the emergence of this project. He has always been worried that big banks on Wall Street would choose to "build weapons behind closed doors" and create some technology that can lock others. But IBM's new project is open source and anyone can use it, which is something Byrne is happy about. He does not believe in a single technology, he believes in an idea. "I am not married to the Bitcoin blockchain," he said, "I am a blockchain agnostic."

Original article: http://www.wired.com/2015/12/big-tech-joins-big-banks-to-create-alternative-to-bitcoins-blockchain/
By CADE METZ
Compiled by: Satuoxi
Source (translation): Babbitt Information (http://www.8btc.com/open-ledger-project)