Collaboration of Microsoft, Goldman Sachs, and Cboe for Blockchain-based Institutional Crypto Asset Solutions

Goldman Sachs ( GS ), Deloitte, Cboe Global Markets ( CBOE ), Microsoft ( MSFT ) and fintech firm Digital Asset have joined hands to create a blockchain network that enables financial products for institutional crypto assets while maintaining security and regulatory requirements. Will help execute smart contracts. 

Key Takeaways

• Goldman Sachs, Deloitte, Cboe Global Markets, Microsoft and Digital Asset are teaming up to build a blockchain network for institutional crypto assets.
• Canton Network will allow various applications to interact and exchange assets built on DAML, a smart contract language developed by Digital Asset.
• Unlike permissionless public blockchains such as bitcoin and ethereum, the Canton network will operate in a similar fashion to a permissioned blockchain, as individual users will need to gain access through a participating financial intermediary.

What is Canton Network?

The Canton Network is based on Damal, a smart contract language developed by Digital Asset, and Canton, a scalable and privacy-enabled blockchain platform. The purpose of the network is to create a decentralized infrastructure that allows various applications built with DAML to interact and synchronize assets, data and cash in previously closed systems in financial markets.

For example, the network could facilitate an atomic swap transaction between digital bonds and digital payments in different applications, ensuring simultaneous exchange without settlement.

Similarly, the network could enable collateralized financial transactions using digital assets in a variety of applications. The network aims to capture the benefits of public blockchains without the perceived drawbacks, such as lack of privacy and large-scale inefficiency, that such heavily-regulated institutions would avoid.

It's a Blockchain, But Not Fully Decentralized

Unlike other blockchains that replicate the same data across all nodes on the network, the security and privacy of the Canton network comes from the fact that transactions are only verified by the participants involved in the transaction. Each node on the network only has information on a need-to-know or permission-to-know basis.

Public blockchains such as bitcoin and ethereum are permissionless, but the Canton network will function similarly to a permissioned blockchain, as individual users will need to gain access through a participating financial intermediary.

While this type of permissioned blockchain is often criticized by proponents of public, permissionless networks, the reality is that this type of regulated asset may not require excessive decentralization. However, in the past, many other similarly constructed blockchains, such as Meta's Diem initiative, have failed for a variety of reasons.

Canton Network has been operating for some time with limited access to its participants such as ASX, BNP Paribas, Broadridge, Cboe Global Markets, Cumberland, Deloitte, Deutsche Börse Group, Digital Asset, Goldman Sachs, Microsoft, Moody's, Paxos, S&P Global Is. , SBI Digital Asset Holdings, and Umbrez.

“By early 2023, financial institutions will transact more than $50 billion per day on the limited-access subnet of the Canton Network,” Digital Asset said in its Canton Network whitepaper.