What Is Digital Asset?
Digital Asset is described as a blockchain startup.
Blockchain, for those who don’t know, is the fundamental technology behind cryptocurrencies like Bitcoin. It’s like a public ledger accessible to all Bitcoin users that displays all recent transactions.
Startups like Digital Asset believe this technology has enormous potential to disrupt the financial industry. It could solve problems like settlement latency and cybersecurity, for example.
With that in mind, Digital Asset is actively building software that uses distributed ledgers – like blockchain – to settle trades made in mainstream financial assets as well as digital assets.
The goal of the technology is to reduce counter party risk while also making settlement faster, cheaper, and more secure.
How Digital Asset Can Help
The chief executive of Digital Asset, Blythe Masters, believes that there is no reason why banks and brokers can’t use blockchain technology to increase their profits.
Masters believes that some banks will develop this technology on their own, while others will research out to third party sources.
While the technology has not yet been implemented in American banks, distributed ledgers are already on the radar in the UK. The Bank of England described distributed ledgers as technology that has “far-reaching” implications.
Meanwhile, Swiss bank UBS announced in late 2015 that it was created a financial technology lab in London to explore how blockchain could be used in finance.
At the time, one UBS executive described blockchain as having the potential to “change the whole trading and settlement topic”.
What Does Digital Asset Do?
Digital Asset describes its mission like this:
“Digital Asset builds distributed, encrypted straight through processing tools. Our technology improves efficiency, security, compliance and settlement speed.”
In order to achieve that mission, Digital Asset promises to create a digital asset software adapter. This adapter would exist in the transaction layer of the current financial ecosystem. The infographic on the Digital Asset website explains this in a more succinct way:
Digital Asset Products
Digital Asset further breaks down its products into four specific solutions.
-Syndicated Loans: Today’s corporate syndicated loans use a manual, paper-intensive process that leads to lengthy and unpredictable settlement times “that average in excess of 20 days.” Solution: Digital Asset promises to implement tokenization of title to complex loan agreement and subsequent secondary provisions managed on a shared, replicated ledger. This will purportedly lead to shorter settlement times and a healthier market with reduced costs.
-US Treasury Repo: US repo market volumes and liquidity have declined ever since the financial crisis. Modern liquidity rulings have forced banks to reduce their participation in the repo business. Solution: Digital Asset believes that central clearing of US repo needs to be developed. They plan to digitize, authorize, record, net, and settle transactions in bilateral, tri-party and cleared repo. This will lead to increased liquidity, reduced balanced sheet exposure, and lowered intraday and counterparty risks.
-Securities Settlement: Modern market infrastructure means that regulatory transparency requirements cannot be met unless cost efficiencies are sacrificed. Solution: Digital Asset will facilitate cryptographic cap tables of all accounts for all participants in the intermediary chain. This will allow regulators to have full visibility into the system and provide greater monitoring capabilities.
-Other Use Cases: Digital Asset claims that it is currently working with major financial firms to “identify existing problems within different markets”. They’re exploring the potential of distributed ledger technology and how it can be used in different systems, including payments, public stock, derivatives, transaction reporting, factoring, bonds, and digital currencies.
What is Hyperledger?
Digital Asset acquired Hyperledger in June 2015. Hyperledger was the foundational technology behind its blockchain platform. A beta version of Hyperledger was initially available on Github.
The remaining open source beta code is no longer maintained. However, Digital Asset claims that they recognize that Hyperledger has always been open source and that, as an acquisition of the company, it’s important for it to remain open source.
In an announcement on the subject, Digital Asset claimed that the open source community can collectively “benefit from security fixes and functional additions from a wider range of developers than would be available to any single company or group.”
Nevertheless, the code has been removed from Github and is currently being rewritten from Erlang and Elixir to Java and Scala “to better integrate with the existing Digital Asset Platform and make it easier for financial institutions to deploy and develop.”
About Digital Asset
Digital Asset is led by chief executive Blythe Masters. Prior to being appointed as chief executive as the blockchain startup, Masters was the global head of commodities at JP Morgan.
In an interview with Financial News, Masters claimed that blockchain, the technology behind cryptocurrencies, was “at least as much an opportunity for incumbents as it is a disruptive threat.”
Masters joined the company after JP Morgan sold its physical commodities division to Swiss trading firm Mercuria in 2014. Described as one of the most influential women on Wall Street, Masters spent 27 years working for JP Morgan and held numerous senior positions.
She also helped pioneer the creation of credit default swaps.
You can get in touch with Digital Asset by filling out the contact form found here: http://digitalasset.com/#contact
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