Guest post: Jesse Chenard, CEO, MonetaGo
As members of Hyperledger for almost two years, we certainly believe in the promises and benefits that distributed ledger technology can bring to many different industries. In the past, we’ve read about the various proofs of concept (POCs) and pilots using Hyperledger Fabric, Hyperledger Sawtooth, and other frameworks within the Hyperledger greenhouse of projects. The many use cases around these Hyperledger projects are vast.
All that being said, the buzz around blockchain is also deafening. Of course, we’ve heard rumblings from those that think this is all hype and won’t truly transform the way business is conducted today. I think it’s fair to say that many of those people have been vocal both behind closed doors and on stages around the world in their demands to see real production deployments in 2018. It’s important to provide a strong “signal through the noise” by validating that Hyperledger Fabric and other distributed ledger frameworks are ready to provide real business value to organizations by standing up to the rigors of a live deployment.
That’s why we’re excited to share this news from the trenches – we have successfully deployed what we believe to be the first enterprise grade blockchain into production for everyday use by multiple financial services organizations. It has been running for nearly two weeks now – everyone involved wanted to make sure it would stand the test of a production workload before making any announcements. So there you have it: completely separate legal entities have nodes on a shared distributed ledger network which they are using in their daily operations. In other words, we’ve created and deployed an enterprise blockchain which is live and kicking, and provides a common platform which is not controlled by any one financial institution to securely and confidentially share information.
Milestone achieved everyone!
Here’s some background information to provide context: The first purpose of this network is to reduce instances of fraud around receivables financing. Receivables financing is one of the fastest growing and most efficient trade finance mechanisms for small businesses to manage their working capital requirements. The Reserve Bank of India licensed three entities to provide a more efficient venue to do this: RXIL, A.TReDS, and M1xchange. RXIL is a joint venture promoted by National Stock Exchange of India and Small Industries Development Bank of India. A.TREDS is a joint venture of Axis Bank (India’s third largest private bank) and mjunction (the largest e-marketplace for steel in the world and also India’s largest e-commerce company which is itself a venture promoted by Tata Steel and SAIL). M1xchange is a leading global service provider in business process and technology management, offering broad spectrum of services in Finance and Accounting.
The Indian financing market currently provides $219 Billion USD to Micro, Small & Medium Enterprises (MSMEs), yet there remains $188 Billion USD of unmet demand which the exchanges were designed to address. Together, they provide competitive marketplaces for small businesses to obtain the best financing possible. The platforms count some of the biggest Indian banks and a number of foreign banks as funding sources. Each of them helps to enable the discounting of invoices from corporate organizations, government departments, and public sector undertakings.
While it is normal for the exchange customers to go to multiple exchanges in order to obtain better price discovery, the exchanges all agreed that they needed a common platform to prevent the customers from obtaining multiple financings against the same set of invoices. By implementing a common blockchain platform, these exchanges were able to eliminate instances of double financing without sharing specific elements of any invoice or client. Ultimately, this implementation leads to the exchanges being able to offer better rates across the board to all of their customers, and provide access to capital for more businesses otherwise deemed too risky.
Keep in mind, these three Indian exchanges are competitors. Their clients are particularly sensitive about their sourcing inputs, and it is imperative that the exchanges not provide any of their client information to a shared registry controlled by any one entity. By creating a blockchain network built on Hyperledger Fabric, together with some intelligent cryptography, that concern is eliminated as the technology enables the exchanges to work together on a shared network to achieve shared goals without compromising privacy.
As a Hyperledger member, we think this is a significant milestone not only for our community, but for distributed ledger technology at large. We offer a special thank you to the Hyperledger team – the open governance around Hyperledger has helped foster our own innovation and growth, and this live deployment is a small testament to that larger group effort. As our first step also provides the opportunity for participants to build additional functionality on the new network, we look forward to writing about additional Hyperledger production deployments in the coming months – and to hearing about those of others.