Ignore the skeptics and naysayers. ASX’s attempt to replace the aging clearinghouse’s electronic sub-register system (known as CHESS) was the right move, even though it eventually turned out that way.
ASX spent a lot of money trying to replace CHESS with a complex combination of technologies, including a version of the blockchain called Distributed Ledger Technology (DLT).
This use of distributed ledgers in financial infrastructure would have been one of the largest non-governmental blockchain-based projects in the world. And indeed, it did not succeed.
But the reason it failed has nothing to do with blockchain.
Part of the problem is that the technology is not widely understood, and worse, it is regularly and repeatedly confused in the media with “crypto.” Most people either don’t know the difference, or don’t really care.
Blockchain is not cryptocurrency. It enables the existence of cryptocurrencies, but has the potential to apply far beyond Bitcoin.
Also referred to is FTX, which is not a blockchain. This is the exchange that collapsed in November after a string of withdrawals, corporate oversight failures, and misuse of customer funds.
The CHESS alternate program was not successful. This was because it was a pioneering project trying to accomplish many things at once with what was still nascent technology at the time.
As the impact of public opinion continues, it is important to recognize that many good efforts to upgrade messaging protocols in the Australian stock market are of great value and benefit the stock ecosystem.
It’s imperative that you don’t throw your blockchain baby out with the bath water. Not all blockchain platforms are created equal. Before tweeting or commenting on this architecture, we need to look at all industries.
This is how Lygon overhauled an outdated 200-year-old paper-based system that had many problems to better manage, store and renew physical bank guarantees.
Of course, Lygon is not alone in using distributed ledgers to create efficiencies and profits never before possible. It is widely recognized as the gold standard for secure multi-party transactions, title management, data transfer, and contract management and auditing.
From enforcing energy supply transitions and documenting emission allowances, to protecting intellectual property rights on music records and keeping personal health data secure, they are no longer seen as solutions to problems.
Businesses are aggressively investing in evolving the distributed ledger landscape to more quickly adapt to changing market conditions and consumer needs.
In October, Samsung announced the launch of a security solution that uses the technology to protect Galaxy devices, TVs and consumer electronics. Meanwhile, Walmart, Carrefour, Unilever and Adidas are already using blockchain-based technology to track their supply chains.
These examples show how distributed ledgers are being used in many industries and locations around the world to securely share data across networks.
Many areas have been pioneered by ASX that ultimately provide important learnings that will benefit the entire market in the future.
I applaud the ambition of this project and hope that it will provide an opportunity for further discussion and understanding of DLT, rather than a hindrance to innovation.
