What Is Digital Asset Holdings? | Distributed Ledgers for Financial Institutions

Blockchain technology is often called the “Internet of value.” If so, it makes sense that the financial industry should be among the biggest to benefit from distributed ledgers. Digital Asset Holdings LLC provides a flexible infrastructure for regulated financial institutions to share processes and data securely. And it’s one of the first big movers to start developing products that will integrate blockchain into the heavily regulated global financial markets.

Its current project portfolio, partnerships, and overall vision are set to bring a steep change to the way that financial transactions are carried out. This is much needed for an industry that still feels the regulatory repercussions of the 2008 global crisis.

Current Landscape in the Financial Industry

The financial industry processes transactions worth trillions of dollars on a daily basis. The infrastructure that processes this transaction volume has evolved–laws, market regulations, computer systems, and databases.

There’s a vast amount of data duplicated across different databases that serve to create trust and resilience in the transactions that are taking place. Each party to a transaction must reconcile each entry, a necessary exercise to ensure the integrity of recorded data. Think double-entry bookkeeping on a global scale.

Because the current infrastructure has evolved to deal with a heavy transaction volume over time, it comes with problems. If there is a regulatory change, like those prompted by the global financial crisis, systems need to be updated to accommodate the changes.

Similarly, hackers force developments and upgrades in security protocols, which in turn require software upgrades that can be expensive and cumbersome for financial firms to apply across legacy systems.

Enter Digital Asset Holdings

Digital Asset Holdings recognizes the potential that distributed ledger technologies (DLTs) can bring to the financial sector. DLTs provide a permanent record of truth held between multiple parties, making the duplication of data across various systems controlled by different parties redundant.

DLTs update in real time, unlike many current systems. The automation capabilities of smart contracts also provide enormous value within the financial sector, creating an automated workflow for the exchange of value, with an immutable fulfillment of agreed conditions. Smart contracts, therefore, eliminate the need for complex legal agreements that are commonplace across the financial industry today.

Digital Asset Holdings also understands that existing blockchains are generally not fit for the purpose of the financial industry. This is due to the many legal and market constraints applied to financial services firms. Legal requirements also govern what kind of information must be public and what must be confidential. Bitcoin and Ethereum are not set up to meet those requirements.

Current transaction speeds are another constraint. No existing public blockchain operates fast enough to handle the transaction volumes needed.

Finally, any smart contracts developed for use within the financial sector must be testable and predictable enough to provide a cast iron guarantee that they won’t be subject to the kind of unintended consequences that the DAO experienced.

Digital Asset Platform

Digital Asset Holdings has developed their own Digital Asset Platform. It aims to navigate these issues to bring the benefits of distributed ledger technology to the financial sector. The platform offers a flexible infrastructure by design. With this flexibility, financial institutions can access customized tools and processes that will mean they can work together transparently.

The following core innovations are at the heart of the system:

Permissioned and Segregated Ledgers

Ledgers that are viewable and editable only by those with permission. Additionally, the segregation element means that the ledger data is separated into parts. Only permissioned participants can view the particular section for which they have access.

All segregated parts of the ledger share a global set of cryptographic hashes, like fingerprints. These hashes align to ensure that the entire ledger data is accurate. It remains consistent for all participants regardless of what they can view or edit.

The ledger contains two components:

1. The Private Contract Store: This contains the details of all contracts and transactions for that particular participant or organization.
2. The Global Synchronization log: This ensures that each segregated component of the ledger is updated and consistent for all participants, regardless of their viewing rights. It serves to ensure that the same transaction is never logged twice. It also notifies changes to those who have the relevant permissions to know about them.

Business Logic Layer

The Business Logic Layer runs on top of the ledger. This layer is developed in a custom programming language called Digital Asset Modeling Language (DAML). It is a domain-specific language. This means that it’s inherently designed NOT to be all-purpose in scope, like the programming languages deployed by Ethereum. It creates predictable behaviors and the ability to analyze all possible outcomes of a particular scenario.

Using DAML provides regulated financial institutions with security. It ensures that smart contracts set up on the Digital Asset Platform will adequately reflect real-life terms. This includes legal and regulatory compliance.

Digital Asset Holdings – The Story So Far

Digital Asset is no blockchain startup in the usual sense of the word. It didn’t conduct any ICO. The company raised over $115m in venture capital funding from major investors including Citi, JP Morgan Chase, and ABN Amro.

The CEO of Digital Asset is Blythe Masters, a former executive at JP Morgan Chase. In addition to her CEO role, Masters is also Chairman of the Governing Board of the Hyperledger Project.

The company is currently working on some high-profile projects, surrounding how stock exchanges conduct and record financial transactions. The Australian Stock Exchange announced that it will go live with distributed ledger-based trading in 2020, based on the Digital Asset Platform.

Swiss SIX Exchange has also announced it will use the Digital Asset Platform for a solution covering the entire bond life-cycle from issuances to settlement.

You can watch Blythe Masters discuss the collaboration between Digital Asset and Hyperledger in the video below.

High Expectations for 2018

Digital Asset Holdings is featured on the WSJ list of 25 Top Tech Companies to Watch in 2018. The list comprises firms that the WSJ believes will emerge in their respective fields as leaders, based on factors such as investment, founders’ experience, and growth. If the financial world is undergoing a sea change with the advent of blockchain and crypto, then Digital Asset appears to be at the helm of the ship.

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