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Blythe Masters Looks Beyond Finance for Next Wave of Blockchain Growth

To hear Blythe Masters tell it, the time has come for Digital Asset (DA) to spread its wings and fly.

The distributed ledger technology (DLT) company she founded in 2014 is entering a new phase, heralded by, among other things, a partnership with Google Cloud to simplify and proliferate the tech.

To date, DA’s strategy has stood out among the big enterprise blockchain players for its laser-like focus. Instead of spending a lot of time on consortiums, proofs-of-concept and the like, the New York-based company concentrated on landing the one big fish.

It achieved that goal late last year when the Australian Securities Exchange (ASX) officially hired DA to replace its creaky Clearing House Electronic Subregister System (CHESS), a multi-year project that’s currently underway.

Now, having earned the rare distinction of a bona fide production customer, Masters’ startup wants to foster an ecosystem around its Digital Asset Modeling Language (DAML), which is about to become available with a software development kit (SDK) via Google Cloud.

“Having spent three and a half years in the design-and-build phase, this is the ‘open up and educate’ phase and [the time to] build a community of channel partners and developers,” Masters told CoinDesk.

This, in turn, will open a vast range of opportunities for DA, she said – both within the financial services industry where Masters spent most of her career and outside it.

“The application of this technology is by no means limited to the world’s biggest market infrastructures,” the former JPMorgan Chase executive said, adding:

“It goes well throughout financial services, well beyond capital markets and beyond financial services into all the other industries that have a vested interest in improving the efficiency of their workflow orchestration.”

According to Masters, there is “a lot of pent-up demand” for DA’s technology which the cloud-based DAML SDK can start to meet and a “potential addressable market that is almost unmeasurable.”

To give a sense of the breadth of this market, Masters rattled off a litany of new pastures for DA, including: healthcare and insurance claims; digital media rights; royalty streams; real estate; lending and collateral management within capital markets, derivatives post-trade, securities post-trade, reference data, supply chain, crypto wallet custody of assets and more.

However, Masters was careful to qualify this, acknowledging the fatigue felt in many corners following the blockchain hype of a few years ago.

“I think there was some fair criticism that blockchain was a technology solution looking for a problem to solve,” she said. “But our approach has very much been to work with customers to identify the problem first and sometimes not to recommend a DLT solution.”

‘Web-paced innovation’

The DA team recently returned from San Francisco, where Masters and Shaul Kfir, DA’s CTO, gave a talk on DLT partnerships at the Google Cloud Next conference.

The primary aim of the Google Cloud partnership is to make it easier for developers to deploy DA’s tech, which Masters describes as “a mission to unleash web-paced innovation across multiple industries.”

This means abstracting away the underlying complexity of the cryptography, the data architecture, the blockchain or DLT state engine, said Masters.

The Google Cloud-DA partnership appears to run deep as well as wide. To help drive the DAML platform-as-a-service (PaaS) program, DA has also welcomed former Google engineering executive AG Gangadhar to its board.

And adding to the symbiosis, Google Cloud has joined DA’s developer program private beta, giving Google Cloud developers access to DAML.

The DLT space has garnered extraordinary enthusiasm and Google’s developers and its customers are no less curious and motivated in this space than any others,” said Masters.

It’s now clear Google is getting serious about blockchain following candid comments last month from co-founder Sergey Brin that the search giant was playing catch up with the blockchain trend.

Google would not comment on the partnership or DLT generally, but an insider close to the DA-Google Cloud partnership confirmed to CoinDesk, “All of Google has access to the DAML SDK, and this includes Alphabet,” Google’s holding company, which has portfolio companies in a wide range of industries.

But not every influential figure in Mountain View is a blockchain convert. CoinDesk asked Google’s chief internet evangelist, Vint Cerf, if he thought tokens could perhaps be used to incentivize users and align them with the goals of tech platforms.

Cerf, who was not commenting on the DA partnership but on cryptocurrency generally, replied in a curt email: “Not clear yet. It could just turn into a speculation like tulip bulbs and bitcoin.”

Still, Masters said DA and Google share a common approach to solving engineering problems and “a focus on empowerment of enterprise customers, particularly in the workflow orchestration space that we have in common. So that is where the enthusiasm is coming from.”

Maverick Masters

To be sure, DA is far from alone among enterprise blockchain vendors in trying to expanding its ecosystem.

For instance, IBM and Hyperledger are hard at work exploring what they can do with partnerships. Meanwhile, a recent announcement from banking blockchain consortium R3 talked up the potential for its Corda platform to be interoperable across a wide range of industries.

There has also been an increase in blockchain-as-a-service announcements of late. BlockApps Strato has also been welcomed onto Google Cloud, while Amazon Cloud Services (AWS) recently cemented a partnership with ethereum design studio Consensys in the form of the Kaleido project.

But Masters pointed out that DA has always charted its own course, adding that the company’s strategy remains unchanged.

“It’s where we always intended to focus,” she said, referring to the new priority on building a developer ecosystem. “We just didn’t approach it via the same avenue necessarily as everyone else.”

Aside from ASX, other customers DA has publicly disclosed it is working with are the U.S. clearing and settlement giant DTCC and Dutch megabank ABN Amro.

Another thing enterprise blockchain watchers seem to be interested in is a possible amalgamation between private or permissioned DLTs and public chains, with their fluidity of tokenized assets.  

Asked for her opinion on the nascent token economy and where it might bleed into the enterprise world, Masters said she is “not ruling out tokens by any means.”

She agreed there is lots of good research and development work being done on this, but said the institutional use of enterprise tokens requires enterprise-grade command-and-control infrastructure.

“It won’t be until the kind of controls you routinely expect around transactions and post-trade processing of a stock or bond today can also be produced for the transaction of a tokenized instrument – whether it’s a stock or a bond or a cryptocurrency – that we will see widespread enterprise adoption of tokenized instruments that rely on public chain technologies.”

Ever the hard-headed businessperson, Masters would not be drawn on the merits or otherwise of one DLT architecture versus another, but answered categorically all the same when she said:

What I believe in is our technology. I don’t mix philosophy or religion with technology. I believe in solving business problems using tech in a cost-effective and safe manner.”

Blythe Masters mage via CoinDesk archives 

The leader in blockchain news, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups.

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Blythe Masters: Business Blockchain Won't Be 'Winner-Takes-All'

Speaking to an audience in New York City on Thursday, Digital Asset CEO Blythe Masters and R3 founder and CEO David Rutter worked hard to cast their projects not as applications but as entire ecosystems for developers to build apps of their own.

Rutter and Masters took the stage during the first session of the Synchronize 2018 event. For Masters and Digital Asset, the fireside chat was an opportunity to showcase a new developer program built around the startup’s smart contract scripting language, DAML (which stands for Digital Asset Markup Language).

“The reality,” Masters said, “is that not all smart contracts are created equal, and some are not entirely smart.” She added that “simply building guardrails” is a powerful tool to prevent catastrophes arising from poorly coded smart contracts.

Masters was alluding to the hack and subsequent collapse of The DAO, the ethereum-based funding vehicle that fell apart in 2016 following a debilitating code exploit.

Indeed, both chief executives spoke about the need for outside input – and development – for their respective platforms.

Rutter said that “we aspire to be the internet for finance and if you want to do that you’re not going to do it with 175 people and $120 million,” and Masters, on the question of interoperability, said “we need cooperation” in order to connect the different types of technology platforms being created. 

“I don’t think it’s going to be a winner-takes-all outcome,” she went on to say.

In addition to security and reliability, the discussion focused on confidentiality.

“When you’re talking about markets where trillions of dollars are traded every day,” Rutter said, confidentiality is incredibly important. R3’s Corda platform and Digital Asset, he continued, “are going to create innovation in financial services for the first time in our lives.”

For both platforms, however, the most important thing is cultivating a community of developers to build on top of the base-level ledger.

“We don’t think the proprietary vertical stack is the way to go,” said Rutter, adding that firms that pursue that outcome “will pay the price.”

Image by David Floyd for CoinDesk

The leader in blockchain news, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups.

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Bitcoin Takes All? Enterprise Blockchains Need Time, Too

Marc Hochstein is the managing editor of CoinDesk and the former editor-in-chief of American Banker. The following article originally appeared in CoinDesk Weekly, a custom-curated newsletter delivered every Sunday exclusively to our subscribers.


Last week I described how bitcoin, as a deflationary currency, encourages delayed gratification. Now there’s evidence that bitcoin’s straight-laced twin, enterprise blockchain technology, requires such an attitude as well.

Overshadowed by the bitcoin price action, the enterprise use case  – and one of its most prominent evangelists – scored a major advance last week. But it was a hard-won victory.

After two years of exploration, the Australian Securities Exchange (ASX) decided to replace its decades-old post-trade settlement system with a distributed ledger from Digital Asset, the startup led by former JPMorgan Chase executive Blythe Masters.

That’s right, replace. This is not another pilot or a proof of concept or a sandbox, it’s real production.

Masters called the agreement “precedent-setting,” and it’ll be interesting to see what else her company does with its $115 million war chest after this prolonged and successful courtship.

But the achievement is all the more impressive considering that the ASX was publicly skeptical about the technology throughout the testing process.

Plan B

So skeptical that the exchange had a contingency plan in place, in case it decided Digital Asset’s technology wasn’t suitable.

It probably didn’t help that just months after the partnership with DA was announced, the ASX CEO who had championed blockchain resigned (even though the exchange quickly reaffirmed its commitment to exploring the tech’s possibilities.)

And it almost certainly didn’t help when, about a year into the process, stakeholders started to express disillusionment about blockchain in the Australian financial press.

Despite all these hurdles, Masters’ team won over the ASX.

“We believe that using DLT … will enable our customers to develop new services and reduce their costs, and it will put Australia at the forefront of innovation in financial markets,” Dominic Stevens, managing director and CEO of the ASX, said in announcing the final decision.

Believe. That’s a strong word, one you hear often in bitcoin, but seldom in enterprise blockchain.

Too big to bungle

And perhaps rightly so.

Financial market infrastructure is, to use the parlance of regulators, “systemically important” – too big and too interconnected with the rest of the economy to bet on a buzzword. The careful, deliberate approach ASX took with DA before closing the deal last week was appropriate. If anything, it’s remarkable it took only two years to get this far.

But that, in turn, means others watching and participating in the space are going to have to exercise patience as well. This is not the kind of technology where you can “move fast and break things,” as Facebook famously encourages its employees to do.

Bitcoin’s resurgence this year has embarrassed the know-it-alls who wrote it off two years ago, confidently declaring that the blockchain, not the currency, would take off.

But DA’s big win shows it was also premature to declare commercial blockchains over, as many bitcoiners were understandably tempted to do this year.

Wristwatch image via Shutterstock.

The leader in blockchain news, CoinDesk strives to offer an open platform for dialogue and discussion on all things blockchain by encouraging contributed articles. As such, the opinions expressed in this article are the author’s own and do not necessarily reflect the view of CoinDesk.

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Blythe Masters: ASX Blockchain Embrace 'Precedent Setting'

Would ASX upgrade?

After months of waiting, the markets finally have an answer, as the Australian Securities Exchange (ASX), the nation’s largest domestic stock exchange, has officially revealed it will upgrade its post-trade settlement system, CHESS, using a blockchain platform designed by startup Digital Asset.

Long considered one of the front-runners in the race to prove blockchain tech’s benefits for global financial infrastructures, the startup headed by former head of global commodities at JPMorgan Blythe Masters had already raised $110 million from a diverse set of industry leaders to prove out the use case.

But despite months and years of trials, what remained to be seen was whether the promise of moving a major global securities exchange to a shared, distributed ledger was worth the cost. And if ASX is to be believed, that’s precisely the case, with the company calling the costs “marginal.”

That hurdle now behind, what happens next could be the large-scale migration of financial infrastructures to a distributed ledger, according to Masters.

In interview with CoinDesk, Masters said the decision not only proves the technology but proves it’s ready for the most daunting enterprise challenges.

“It’s absolutely a precedent-setting event,” she said, adding:

“It’s the first time that distributed ledger technology has been given a validation by a major systemically important market infrastructure whose standards from an enterprise point of view are as exacting as they can be.”

Background and future

Yet it’s perhaps all the more impressive as the effort to replace ASX’s Clearing House Electronic Subregister System, or CHESS for short, began long before blockchain was even on the company’s radar.

In fact, ASX had already set out to upgrade its aging system by the time it first met with Digital Asset in 2015, according to ASX CEO Dominic Stevens, speaking at the press event last night. But with the advent of distributed ledger technology, the potential to not only upgrade the system but create entirely new services became a serious point of interest to the exchange.

By using a similar payment messaging system as is currently in place, but anonymized and accounted for on a distributed ledger, a wide range financial products that rely on automated settling can now be created, Stevens said.

To enable that functionality, ASX partnered with Digital Asset and even become one of its early investors, and in remarks yesterday, Stevens indicated the company is increasing its commitment to the startup.

In a move that stands to help offset some of ASX’s own expenses if the technology is widely adopted, the exchange is opting to take up its pro-rata right to participate in Digital Asset’s recent Series B financing.

According to a statement provided to CoinDesk, the total amount raised by Digital Asset to date after that investment is now over $115 million, making the additional fund worth about $5 million based on the previously reported numbers.

Toward implementation

Going forward, the CHESS platform will be upgraded to serve what Stevens called ASX’s $1.5 trillion-$2 trillion securities business, with a possible implementation on the exchange’s $2 trillion cash debt market at some point in the future (though he added that was not currently being discussed).

Still, any move is likely to create a shake-up elsewhere in finance, as other stock exchanges haven’t exactly been lying in wait with their own blockchain research.

Nasdaq, for example, has taken a leading role in moving private stocks to a blockchain, TMX Group has launched a beta for trading natural gas and many other exchanges have experimented to a lesser degree innovating on the edges of their operations.

However, before any of that can happen, ASX needs to further prepare the Digital Asset platform for live trades. To do that, the exchange plans to engage in what Stevens described as “deep consultation” with its stakeholders over the next four months in an effort to built a toolkit of “potential advancements” in settlement services enabled by distributed ledger technology.

By March 2018, the exchange intends to present the full scope of the project as a result of this discussion, a more exact timeline and final launch plans to the public.

Speaking at the press event, Steven said:

“Updating a system like this is a big undertaking, it only happens once every 15 or 20 years so we need to make sure it’s future-proofed.”

Image via Michael del Castillo for CoinDesk

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Is Blockchain Worth the Trouble? Blythe Masters (and More) Say Yes at Sibos

Building with blockchain is tough – for every problem the tech promises to solve, it seems another pops up.

But if you take the advice of former JPMorgan Chase executive and Digital Asset CEO Blythe Masters, it’s worth all the fuss. Speaking on a panel yesterday at Swift’s annual Sibos conference in Toronto, Masters emerged from a relatively silent period with a defense of the technology.

Fresh off raising $40 million in funding, Masters told the audience:

“I don’t think blockchain solutions inherently introduce risk, and in some cases they may inherently mitigate them.”

But integrating blockchain for its myriad of benefits – including faster settlement times and greater data transparency – is an expensive endeavor. DAH, in particular, has raised $107 million in funding so far to expand the startup’s blockchain solution, which it is working to integrate into the Australian Securities Exchange (ASX), the country’s largest stock exchange.

As such, Masters’ comments set the stage for what would be a nuanced discussion about how real blockchain applications deal with the two key pain points: security and compliance.

“It’s not as simple as just introducing new tech,” said Ikuma Ueno, head of blockchain and DLT at Japan’s Mizuho Financial Group.

Handling the keys

As put forward by the panel, the questions that typically arise when building blockchain solutions tend to focus on the management of cryptographic keys that give users access to the ledger.

But Masters, instead of viewing this as an obstacle for distributed ledger implementations, positioned it as part of a larger threat against the way cryptographic keys are handled in today’s centralized infrastructures.

“The propagation of higher standards of key management for enterprise is something everyone knows they have to do anyway, and it has absolutely nothing to do with blockchain,” said Master, adding:

“In some ways, the blockchain evolution or revolution is helping advance that. It’s brought R&D to this area that’s been constructive.”

Echoing Masters’ statements, Tom Jessop, the president of blockchain startup Chain, argued blockchain technology is proving helpful in eliminating the “honeypots” of data that lure attackers to centralized systems. And that in itself makes the cost of blockchain worth the future savings.

Large financial institutions seem to agree. Jessop’s startup Chain has built live blockchain solutions for both Citi and Nasdaq, and has secured $43.7 million in funding.

He continued, saying blockchain’s append-only data structure minimizes the chances of fraud as well.

Compliance as security

But, Jessop went on to argue that security isn’t as big of a cost obstacle for blockchain projects as compliance costs are. “Security is very important,” he said, “but it’s not of first-order importance.”

The global bank representatives on the panel – Mizuho Financial Group’s Ueno and Alicia Pertusa, the head of corporate and investment banking at BBVA, which is working on its own blockchain foreign exchange pilot – agreed saying that working with regulators and standards bodies should be a focus for those implementing blockchain.

But even that hurdle can, and should be, overcome. For instance, Ueno has already had success with this, working with Japan’s financial regulators to change the country’s requirement that bills of lading must be paper.

While regulators might not typically be thought of as a security feature, the sentiment was struck unanimously among the panelists. Because regulators craft rules to protect consumers and the financial system against fraud and malfeasance, working within their guidelines can protect companies from vulnerabilities they might have otherwise missed.

In summary, the chief information officer of foreign exchange technology provider CLS, Thomas Zschach, affirmed the importance of working with regulators to ensure that the potential risks of working with blockchain do not outweigh the benefits.

Zschach concluded:

“They want assurances because that’s their job. They want to make sure the global financial infrastructure remains stable.”

Disclosure: CoinDesk is a subsidiary of Digital Currency Group, which has an ownership stake in Chain. 

Panel image via Michael Del Castillo

The leader in blockchain news, CoinDesk is an independent media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. Interested in offering your expertise or insights to our reporting? Contact us at news@coindesk.com.

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$40 Million: Digital Asset Holdings Closes Series B Fundraising

Digital Asset Holdings LLC has raised $40 million in a Series B round, bringing the enterprise blockchain startup’s total funding so far to $110 million.

Jefferson River Capital led the funding round, which included new and previous investors.

Digital Asset, founded by Wall Street veteran Blythe Masters, has also hired Clyde Rodriguez, a former Microsoft executive, as chief information officer and chief technology officer for engineering, a newly created position. Rodriguez will join the firm’s executive committee and report to CEO Masters.

Masters, a former top executive at JPMorgan Chase, was an early proponent of using distributed ledger technology to modernize financial services.

In a press release today, she said:

“The addition of Clyde and the closing of our Series B financing position Digital Asset to capitalize on the enormous opportunities we see.”

New hire Rodriguez is also a former co-CTO of Two Sigma Investments with 20 years of experience in enterprise software and cloud development. At Microsoft he formed and led the Azure cloud networking group as general manager. Earlier, he led Microsoft’s Windows division in creating and delivering the first 64-bit Windows client and server operating systems.

Digital Asset, or DA, as it now calls itself (having dropped the “Holdings” from marketing materials), has kept a relatively low profile recently compared to rivals R3 and Ripple. Far from idle, though, the firm’s been building a distributed ledger settlement platform for the Australian Securities Exchange, one of its investors, since January 2016. However, the exchange has yet not committed to using the system, and has given itself a deadline of December to choose whether it will do so or pursue a more traditional upgrade.

Blythe Masters image via the CoinDesk archive

The leader in blockchain news, CoinDesk is an independent media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. Have breaking news or a story tip to send to our journalists? Contact us at news@coindesk.com.