Adam Ludwin, CEO of Chain, a company that has developed blockchain protocols for Visa and Capital One, told Fortune Magazine that blockchain’s main purpose is to disrupt financial networks and not the non-financial areas that reports have cited as being disrupted.
Ludwin said blockchain is a database for money, and he doesn’t know why people talk about its implications for home deeds, voting registries and health records. While he recognizes that blockchain can accomplish these things, he sees them as marginal use cases that distract from the technology’s core purpose, which is to replace a layer in the financial system by truly digitizing money.
Ludwin recently urged central bankers to adopt blockchain technology. He believes it will disrupt networks such as SWIFT (Society for Worldwide Interbank Financial Telecommunications) and clearing houses that use slower processes for financial transactions. Online messaging allows parties to agree to a transaction in seconds, but recording the agreements takes days.
Blockchain technology will most disrupt organizations processing digital messages for custodians, Ludwin said. Messaging layers are the most at risk.
Chain has raised around $44 million and is creating software to allow the financial industry replace existing record keeping systems, he said. Money will become a fully digital asset as banks use the blockchain to send assets themselves as opposed to sending messages that record asset transfers.
Chain has developed a blockchain protocol for Capital One, Visa and other financial players. Its competitors include R3, which is building a blockchain standard for banks, and Digital Asset Holdings, which is retooling the Australian stock exchange’s back end.
IBM and other technology firms are also expanding into blockchain technology.
Also read: Chain CEO urges central bankers to ‘run’ towards blockchain
Ludwin said Chain is unique in that it is a Silicon Valley technology player with a primary focus on technology. He compared Chain to Cloudera and HortonWorks, which provide a model for creating the next generation of networks and databases.
Asked how he knows Chain won’t fall victim to the same blockchain hype that he himself criticizes, Ludwin did not offer a direct answer. He said his August press conferences will be his last until he has a product to display.
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