One Chain to Rule Them All?

Industry experts weigh in on how many blockchains are needed in the industry.


Dan compares industry experts’ opinions on whether or not a single distributed-ledger platform for the capital markets is likely to emerge.

When the dust finally settles on industry adoption of distributed-ledger technologies, how many ledgers will exist? It’s a question that’s had an evolving answer over the past few years as industry folks continue to gain a better understanding of how the complex technology works. 

The word “industry standard” gets thrown around a lot when anyone talks about their offering, but when it comes to things like the Utility Settlement Coin (USC), a digital currency used to clear and settle trades being developed by a group of banks and other financial services firms, it would seem like it might be counterintuitive to have several iterations of the same type of project going around. 

Leda Glyptis, a director at Sapient Global Markets who previously ran BNY Mellon’s EMEA innovation center and was involved in the bank’s initial talks around joining the USC project, says a year ago the common belief in the space was that industry standards needed to exist. Firms needed to agree on the right fabric and plumbing to ensure an ideal setup. One year and several working groups later that sentiment has changed slightly, according to Glyptis.

“Will there be one blockchain to rule them all in terms of the planning? Ideally, quite a lot of people are spending toward that,” Glyptis says. “We’re seeing more and more exceptionally smart people who do this for a living saying you don’t have to have one—you just have to have that interoperability.”

Several Chains

When the dust finally settles on industry adoption of distributed-ledger technologies, how many ledgers will exist?

Peter Randall, CEO of blockchain settlement and payments provider SETL, takes a harder line on the topic. He says the industry is not moving toward one “pan-galactic blockchain.” Instead, he says, institutions and jurisdictions will have their own blockchains with the key being the ability for those different chains to talk to each other. 

Randall uses the variety of mobile phone networks currently available as an example of how the industry will work. Just because one person uses Verizon and another uses AT&T doesn’t mean they won’t be able to speak to each other. He admits that there is a tipping point before the space becomes too saturated, but says there will never be only one chain.

“Anybody who suggests that there should be one great big chain is bonkers,” Randall says. “That’s not the way it works.”

More to Learn

Saket Sharma, CIO of treasury services at BNY Mellon, one of the firms involved in the USC, says it’s too early to say definitively that only one chain should exist. The technology is not yet mature enough for proponents to make that decision. For the time being, the more people working on it the better, Sharma says.

“You don’t want to hinder the innovation that’s happening across the board. We don’t know what the end goal is going to look like at this point,” Sharma says. “I think it’s good to have people explore it, because we don’t know where it’s going to land.”

Edward Budd, chief digital officer of global transaction banking at Deutsche Bank, which is also involved in the USC, echoed Sharma’s sentiments. The industry will benefit from firms working on small, practical situations and tests to better understand the interoperability between the different ways that the technology can be executed, he says. 

However, as use-cases become clearer, things will start to settle down, according to Budd.

“I think it needs slightly more maturity in what’s being proposed, and that’s why we see there only really being some very niche examples of this that really get brought into production. Nevertheless, some will make it into production in the next six to 12 months,” Budd says. “How I see it at the moment is that those will start to give more practical information about how and what is necessary to interoperate and which flavors match which markets best.” 

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