Our new Disruption by Blockchain series aims to highlight companies that are leveraging the incredible potential of blockchain technology to disrupt and revolutionize their industry. Through one on one interviews, we'll speak directly with industry leaders to cut beyond the hype and get directly to the heart of practical use cases and examples of how it will change the world, one industry at a time.
The following is an interview we recently had with Dan Conner, founder and architect of DisLedger.
1. What’s the history of DisLedger? How and where did you begin?
DC: Formal design work on DisLedger began in early 2016 in the Washington DC area. At first, I looked at the existing consensus mechanisms and just tried to come up with a new consensus approach that fit within a blockchain architecture. But it became evident that the entire blockchain architecture needed to be reworked to allow it to scale dramatically. Small tweaks like changing the consensus mechanism wouldn’t make much impact as the entire blockchain architecture was designed for slow, globally accessible, and totally transparent transactions. That design works well for what bitcoin needed in 2008, but it isn’t what the enterprise market needs today.
2. Who are the founders and key team members?
Dan Conner is the founder and architect of DisLedger®. Dan develops advanced technology to solve challenging problems including addressing the scalability and privacy issues in distributed ledger technology. Dan created the DisLedger® architecture to support financial market infrastructure for capital markets and payments.
Previous design work includes an Internet Of Things (IoT) radio system for beyond line of sight data connectivity, and an active electrically steered array antenna program for commercial satellite communications. Dan was Vice President of Sales and Marketing for Innovative Concepts, Inc. in Mclean, Virginia. He led a business development team responsible for global sales of specialized defense communications products including Mobile Ad Hoc Networking (MANET) or mesh networking systems.
Dan served in the U.S. Army Special Forces with tours in Afghanistan and Iraq; and has a B.S. in Commerce, and a M.S. in Management Information Systems from the University of Virginia.
3. What problem are you solving? Who are you solving it for?
DC: Current blockchain based systems suffer from issues scaling to handle large transaction volumes and by their nature are transparent. Many use-cases require Distributed Ledger Technology (DLT) systems to handle hundreds of thousands of transactions per second (TPS), and to maintain data privacy. DisLedger scales to hundreds of thousands of TPS easily in a cloud or data center environment, it even runs 5,000 TPS on an iPhone. By comparison, bitcoin handles about 7 transactions per second, and Ethereum around 15. Blockchains’ limited capability to scale is what causes a game like CryptoKitties to crash the entire Ethereum network. Enterprise customers handling the financial market infrastructure can’t accept that type of performance, and often, by regulation, are not allowed to share transaction data, even within a permissioned blockchain network. So DisLedger is designed for systems that need to share data between enterprises at high scale and with complete data privacy.
4. What is your solution to this problem?
DC: DisLedger® is a patent-pending architecture designed from the ground up to be highly scalable and totally private. We create Counterparty Ledgers between two organizations that maintain a ledger of individual transactions each bound together using the hash of the previous transaction. Only the counterparties to the transaction see the data, and no other organization is required to process it. The process is incredibly fast and totally private which meets the needs of large enterprises. A proof of concept that handles thousands of transactions per second is available on: https://www.disledger.com/paymentPOC.html
The data from each counterparty relationship is aggregated into the organization’s Prime Ledger. The Prime Ledger holds the current position of all the assets that the organization holds, across all its counterparty relationships. So, in one location the organization has a real-time picture of its holdings. This architecture allows for bilateral transactions between two banks, or two companies; and it also supports multilateral transactions including a central clearing party between two banks. It’s a flexible, fast, secure DLT to support regulated industries like capital markets and payments systems.
5. Why is your industry ripe for disruption?
DC: There is a tremendous amount of work in DLT in the capital markets and payments spaces. Traditionally these markets have been leaders in adopting new technology (albeit slowly) as the cost savings can be significant. Many of the systems that are currently running are reaching their end of life and need to be replaced. Enterprises are looking at distributed ledgers to be able to consolidate down from numerous IT systems and realize internal cost savings. Even more, savings will be generated as the cost of collateral required in the capital markets will be reduced. Last year McKinsey predicted that blockchain/DLT would have $80-110 Billion in impact on financial institutions by 2021.
6. What’s the future of your industry?
Prediction #1: DLT technology will continue to evolve and see actual significant implementations in financial markets even though it will not be covered as much in the news. That’s probably a good thing… while there may be fewer headlines claiming “blockchain will solve all the world’s problems” the IT departments will actually be able to get some work done creating solutions for their companies’ problems.
Prediction #2: Consortia will lose members as the DLT field matures and its true utility is determined by each company. I’ve heard from a few large corporates that don’t believe solutions that meet their specific needs are being developed; which makes sense because blockchain is not a technology that can solve all problems. So, we’ll move from the broad consortia to more tailored products being developed for specific customer verticals.
Prediction #3: There will be a decrease in emphasis on innovation labs and internal experiments in larger companies as more employees become familiar with the technology and vendors bring full product offerings to market. DLT will become more accepted and frankly less novel so it will get less attention at the board level and become a standard part of the IT infrastructure.