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IBM opens Hyperledger Fabric source code to drive enterprise blockchain adoption

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The global blockchain technology market size is projected to reach $72 billion in the next five years. In order to ensure this growth, however, blockchain solution providers must continue to advance and innovate. 

For example, public enterprise blockchain use has become an ongoing trend this year as companies like ConsenSys aim to drive adoption for open, permissionless networks. On the flip side, it’s important to point out that private blockchains are still being leveraged by enterprises and will continue to be utilized as innovation continues.

Advancing open, permissioned blockchain networks

Most recently, computing giant IBM announced that it has open-sourced a large portion of its IBM Blockchain Platform code to help drive up adoption rates for enterprise blockchain use cases.

Kareem Yusuf, general manager of AI and blockchain applications at IBM, told Cointelegraph that this is one of IBM’s largest contributions to open-source code. He further noted that the company is unveiling a new Hyperledger Fabric support offering, along with donating the code that supports token exchanges on Hyperledger Fabric, known as Fabric Token SDK. Yusuf said:

“Our intent is to make sure we have a vibrant and active Hyperledger community. To support this, we have announced two key moves. One is the donation of our management console code capabilities, which was in our IBM Blockchain Platform, into the Hyperledger Labs world. Another is making available a support offering for those wishing to use Hyperledger Fabric with full-product support from IBM.”

According to Yusuf, IBM’s significant code contribution will make it easier for Hyperledger users to utilize Fabric, which is an enterprise-grade distributed ledger platform that caters to a variety of enterprise use cases. IBM’s blockchain platform is powered by Hyperledger Fabric.

It’s also worth mentioning that Hyperledger was launched in 2015 by the Linux Foundation as an open-source collaborative effort to advance cross-industry blockchain technologies. Hyperledger hosts a number of enterprise blockchain projects such as Fabric.

Brian Behlendorf, executive director of Hyperledger, told Cointelegraph that IBM’s new contributions will specifically make it easier for every developer to build on top of and manage a Fabric blockchain network. He further noted that these new efforts are organized as “Labs,” which are separate projects from Fabric but are used to build upon the Fabric framework.

For example, Behlendorf pointed out that Fabric’s “Token SDK” will help formalize the approach for managing tokens on top of Fabric. Building tokens on top of Hyperledger has always been possible, as Metacoin (MTC) was the first cryptocurrency built on Hyperledger to achieve mainnet status in 2018. Although this is a feature offered to developers, Behlendorf noted that it had previously required a lot of “do-it-yourself” effort. “Now that gets a better-supported approach,” he remarked.

Behlendorf added that another Lab, the “Fabric Smart Console,” makes managing a cluster of Fabric nodes across a network even easier to monitor and manage. Both of these Labs should become more accessible for developers to leverage once IBM’s full-support offering is available in the Red Hat Marketplace sometime this fall. The offering will include access to IBM-certified images, code security scans and around-the-clock customer support. Yusuf added:

“Being able to manage Hyperledger Fabric has been challenging. A major thing to consider here is support. If all costs of support are embedded in a single project, this can’t be monetized across other projects, and it becomes more expensive. A standardized support offering, however, can be very well structured to fit across multiple use cases.”

Specifically speaking, Arun S.M. — Hyperledger contributor, leader in the Hyperledger India chapter and member of the Hyperledger Technical Steering Committee — told Cointelegraph that the announcement of Fabric Smart Console, the crux of operations part of IBM Blockchain Platform, came as a surprise, noting that the secret sauce has now been revealed:

“There are projects within Hyperledger (including Labs) that can deploy a network, help to visualize and monitor deployed networks, including performing operations to varying degrees. What brings in excitement around the latest announcement is that IBM Blockchain Platform is used in many production applications. It is mature and seasoned. Having a self-hosted management portal with an intuitive UI that can hide complexities and reduce the network administration is a blessing in disguise for many.”

Ultimately, Yusuf explained that these new offerings will help increase adoption for enterprise blockchain use cases looking to leverage permissioned networks. Moreover, Yusuf noted that open-sourcing the Fabric code will help bring down costs, which has been a primary challenge for small-to-medium-sized companies looking to use permissioned networks.

This is important for a number of reasons. For instance, even though one industry report shows that public blockchain adoption has emerged as the leading market segment, Yusuf mentioned that enterprise use cases that leverage a shared, permissioned blockchain are still critical — especially for use cases like supply chain management:

“By definition, a supply chain is a network that involves sharing information between suppliers and different parties, so you need a blockchain infrastructure to tackle inventory visibility, provenance, responsible sourcing and more.”

By allowing Hyperledger Fabric’s base foundation to be open, Yusuf believes this will encourage more people to engage and collaborate using permissioned networks.

Hyperledger community is expected to grow

In addition to advancing enterprise blockchain adoption using open, permissioned networks, IBM’s contributions may draw more developers to the Hyperledger community.

According to Behlendorf, the impact of IBM’s open-source offerings will bring more developers to Hyperledger Fabric and the community as a whole. “This will hopefully inspire more to cross over into becoming contributors and core maintainers as well,” he remarked.

Related: As Microsoft Azure closes shop, ConsenSys Quorum opens up to new users

As such, enterprises leveraging Hyperledger Fabric are likely to grow. For example, the Filecoin Foundation recently announced that it has become a member of the Hyperledger community. Marta Belcher, board chair of the Filecoin Foundation, commented that Filecoin’s (FIL) decentralized storage capabilities have tremendous potential in the enterprise space. “We’re thrilled to join Hyperledger, a leader in enterprise blockchain technology, to explore these possibilities,” she said.

It’s also noteworthy that IBM’s contributions to Hyperledger Fabric demonstrate the company’s commitment to advancing enterprise blockchain. This is key to recognize, as it was previously rumored that IBM Blockchain’s team was “dissolving.”

Yusuf remarked that he’s particularly focused on scale and adoption moving forward. “From IBM’s perspective, you can expect to see use cases that leverage blockchain to bring actual end value to our customers.”



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DeFi industry draws in commercial banks? Siam bets with $110M fund

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While serious institutional interest in crypto is perhaps becoming more of an established trend than an emerging narrative, the focus of big-money players is usually on Bitcoin (BTC). However, assets like Ether (ETH) and decentralized finance (DeFi) are beginning to pique the attention of major investors.

For Siam Commercial Bank (SCB), DeFi is a major focus point of its current digital asset drive, as Thailand’s oldest bank prepares itself for the expected financial technological disruption of decentralized finance. While other banks are still undecided or only making temporary forays into interacting with digital assets, SCB says it is keen on committing funds to explore the blockchain and DeFi space.

SCB’s DeFi focus is also coming at a time when regulators in Thailand are targeting the decentralized finance space for more stringent regulations. Indeed, regulatory attention is increasingly coming the way of the niche market space with national and intergovernmental agencies looking to craft legal policies for the DeFi market.

DeFi initially held the promise of decentralization; the disintermediation of the established gatekeepers of global finance. However, with banks and financial institutions investing in decentralized technology, the narrative appears to be shifting towards a hybrid form of DeFi known as regulated DeFi, which combines the extant norms and efficiency of traditional finance, instant settlements and cost reduction benefits associated with decentralized protocols.

DeFi ambitions

Siam Commercial Bank’s $110 million blockchain war chest started as a $50 million seed fund initiated back in February by SCB 10X, the bank’s venture arm. As reported by Cointelegraph at the time, the fund further strengthened the bank’s forward-thinking approach to the emerging developments in digital finance.

In a conversation with Cointelegraph, Mukaya ‘Tai’ Panich, chief venture and investment officer at SCB 10X, said that DeFi was a sort of revelation for the bank during its assessment of the emerging digital finance landscape.

“We were doing work on the blockchain industry and started looking into DeFi. And we were amazed by it,” Panich told Cointelegraph. According to the SCB 10X executive, the bank was quick to spot the paradigm shift of potential DeFi technology and the possible disintermediation of the traditional financial institutions.

“DeFi projects can be completely automated,” he said, noting that human involvement would be restricted to smart contract code upgrades. Panich also touched on the revolutionary nature of smart contracts and how lines of code can enable direct transactions between entities like lenders and borrowers without the need for a central counterparty.

Given the possibility of DeFi upending the legacy finance status quo, Panich says banks would do well to prepare for the imminent disruption:

“The reason we want to invest in DeFi and be part of the DeFi protocol’s ecosystem is because we want to understand and capitalize on DeFi, given its potential to meaningfully impact the financial industry.”

At $110 million, the blockchain and DeFi fund is almost half of the SCB 10X’s $220 million venture capital fund. Commenting on the size of the allocation to digital assets, Panich said that it was a reflection of the bank’s commitment to the DeFi space, adding:

“SCB 10X has invested and developed multiple collaborative relationships with the blockchain community in Asia and across the world including Ripple, BlockFi, Sygnum, Alpha Finance Lab, Anchorage, Anchor Protocol (part of Terra chain), Axelar and Ape Board, among others.”

Related: Thai bank’s venture arm invests in institutional crypto custodian Anchorage

Upending global finance

Back in April, John Whelan, head of Banco Santander’s blockchain lab in Madrid, put forward an argument for regulated DeFi. According to Whelan, private layer-two settlement networks for asset classes running on top of public blockchains will likely emerge in the future.

According to Whelan, blockchain adoption for reducing transaction settlement throughput is a major focus point for legacy finance stakeholders. Whelan’s comments highlighted the emerging narrative that rather than disintermediation, financial institutions will find means to adopt DeFi tech to their own backend processes.

Panich also echoed similar sentiments, telling Cointelegraph: “I want to point out that I really see a future where traditional financial companies will work together with DeFi companies. My view is that in the future, there will be an integration of traditional finance with DeFi.”

According to the SCB 10X chief investment officer, banks and financial institutions have the necessary “customer-facing” experience to better offer innovative fintech services to consumers. “In the future, I can see a world where DeFi can power the back-end of traditional finance companies,” Panich added.

For Rachid Ajaja, CEO and co-founder of decentralized capital market outfit AllianceBlock, the promised upending of legacy finance by DeFi is something that will happen in the long term. However, Ajaja said the short-term trend will consist of more financial institutions leveraging aspects of decentralized finance.

The AllianceBlock CEO drew parallels with the digital transformation era that saw the emergence of fintech companies providing services via APIs that interface with the banking system. “With the bridging of DeFi and financial institutions, we will see exactly the same thing, and bit by bit, legacy systems will change,” Ajaja told Cointelegraph, adding:

“Long term, I am absolutely confident that DeFi will upend the global financial system completely because everything that is done in traditional finance can be replicated in DeFi with lower cost, less need for a middleman, new opportunities and increased new revenue streams. It’s only a matter of time.”

Craig Russo, director of innovation at the nonfungible token vault and marketplace protocol PolyientX, also provided further insight as to the possible future path for DeFi adoption in global finance. Russo told Cointelegraph that financial institutions will most likely adopt open-access protocols via initiatives like Compound Treasury while also utilizing DeFi technology within their internal systems.

“A big goal of the DeFi movement is to revamp the current economic system to better align incentive structures, which may ultimately come at odds with the interests of some institutions while opening the door to a new wave of fintech innovation,” Russo added.

Related: Thailand to target DeFi in latest regulatory clampdown

Dealing with regulatory pressure

As the SCB continues with its exploration of blockchain investment opportunities, authorities in Thailand are shining the regulatory spotlight on DeFi. Back in June, Thailand’s Securities and Exchange Commission (SEC) announced plans to consider a licensing regime for the decentralized finance protocols, especially projects that issue tokens.

Commenting on how the bank will handle the increased scrutiny of the DeFi space, Panich stated, “SCB 10X’s aim is to absolutely work within the regulations laid out by the government and regulators such as the Thai SEC and the Bank of Thailand.”

“Blockchain and DeFi are very young, emerging and fast-changing industries. As a TradFi player active in DeFi, it is incumbent upon us to work closely with the government and regulators to help put forward the DeFi industry’s perspective, finding optimal ways to move the industry rapidly forward.”

The Thai SEC’s plan to consider DeFi regulations is indicative of the current attention being paid to DeFi by regulators across the globe. Also in June, the World Economic Forum released a policy toolkit for fair and efficient DeFi regulations.

The emphasis on fair and efficient regulations is likely based on fears that blockchain startups may be at a disadvantage from a compliance standpoint if more stringent measures are applied to DeFi. Regulated entities like banks and financial institutions may find it easier to negotiate these policy constraints.

Indeed, AllianceBlock’s Ajaja made this same point to Cointelegraph, stating, “DeFi primitives are definitely at a disadvantage in this regard against their counterparts in mainstream finance.” As such, Ajaja stated that compliance gateways for protocols like Know Your Customer and Anti-Money Laundering are necessary for greater compatibility with mainstream finance and the move towards interfacing with real-world assets for DeFi primitives.