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.
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.