ConsenSys is a leading blockchain technology services provider powered by Ethereum. Blockchain Asset Review spoke to Charles d’Haussy, who recently joined the firm as director of strategic initiatives. He spoke to Blockchain Asset Review on how ConsenSys is helping connect blockchain to the masses. Some of the key initiatives include building exchanges for unlisted securities (such as Singapore-based “1exchange”), digitizing commodities financing business (“komgo”), infrastructure financing (“Allinfra”), and making Ethereum more scalable, amongst others.
By Tsering Namgyal
Q: You have recently joined ConsenSys? What are your plans for blockchain in Asia?
A: ConsenSys is deeply committed to bringing Ethereum to financial services and fintech. Financial institutions are highly competitive and service providers must innovate to stay attractive to their customers. Over the period of just three months, eight new virtual banks were granted licenses to operate in Hong Kong, marking an important step in connecting this technology to the masses. These digital-first banks are expected to bring new innovative offerings to customers, and in turn, encourage the financial sector to move from experimenting with digitalization into delivering digitalization.
We are sharing our deep expertise in enterprise blockchain with financial institutions to help them capitalize on distributed system technology and enable them to be leaders, for instance, in the digitalization of assets.
Distributed technologies are ideal for complex systems, such as identity services for large corporations. With robust identity authentication as a foundation, you can greatly improve fraud-prevention, cut inefficiencies, deliver automated reconciliation and customize targeted products.
Q: How far are we away from mainstream adoption of blockchain? The implications of Facebook’s digital currency Libra on the industry?
A: Mainstream adoption of blockchain will not come in only one shape or form, but will be a sum of many things. Gaming, for example, is already bringing blockchain to many people. We also have to define the concept of ‘mainstream’. Blockchain will power Facebook’s Libra, signifying a huge level of mass adoption if Libra is successfully introduced worldwide. Currently, many people still equate blockchain with cryptocurrencies, specifically bitcoin. Some consider this conflation to be reductive, but for many, cryptocurrencies have been a significant first step in understanding and experiencing blockchain-based systems.
We can draw a parallel with GPS. Very few people actually know how GPS works — the mathematical concepts of satellite triangulation, etc. — but we have all adopted it through Google Maps. Entire business industries from Uber to Deliveroo are built on GPS.
This is why ConsenSys is focused on enterprise adoption and use cases. Entrepreneurial and creative minds will continuously discover new ways to utilize blockchain for their customers. Adoption is happening and we are excited.
Q: What are some of the most exciting blockchain use cases your firm is working on? Any new strategic partnerships for your firm in Asia?
A: In Singapore, we are preparing for 1exchange (1X) to go ‘live’ very soon. 1X is the world’s first regulated private securities exchange on public Ethereum mainnet. We built this with our partner, CapBridge Group, a global financial platform backed by the Singapore Exchange and investors such as Tim Draper.
This is significant because 1X is a regulated channel for alternative financing, for private unlisted companies to access equity, and to provide tradable private equities as a new asset class. By building on public Ethereum, 1X can partner with other blockchain-enabled exchanges, opening up a global liquidity pool.
We are also actively exploring opportunities to roll-out “komgo” in Asia. Komgo is a trade commodity financing platform comprised of a global consortium of banks and commodity companies including ING, ABN Amro, Citi and Shell.
Conventional trade commodity financing is still paper-based and inefficient. In one instance, our blockchain-based process could complete the process seven days before the paper-based documentation (sales contract, letter of credit and certificates) reached the banks.
Additionally, Allinfra, a ConsenSys portfolio company, seeks to democratize infrastructure financing through the provision of accessible, low cost, direct exposure to unlisted infrastructure assets.
Q: Joe Lubin has said that Ethereum will be 1,000 more scalable within the next year or two? Your thoughts?
A: At SXSW earlier this year, Joe explained how we see Ethereum being established as a globalbase trust layer. What we call “Layer Two” is the scalability layer built on Ethereum that enables point-to-point transactions to networks, which in some cases might be more centralized, but still can be trusted by linking groups of transactions to the base Ethereum layer.
We are already seeing exchanges and applications (such as games) using Layer Two scaling technologies — Plasma, POA Network, and Loom Network, for example — to reach 1000s of transactions per second. So, Ethereum has already scaled quite significantly. Overall, we are very excited about the works of groups such as zk-STARKS, zk-SNARKS, Truebit and Plasma. Very soon, we should see operational test-nets aiming at a fully operational phase-0 Ethereum 2.0.
In addition, we have to look at how scaling applies to the user. To be more specific, how does scaling bring value for a particular user group? If we look at security tokens and the tokenization of asset classes such as infrastructure and real estate, in one sense, scale doesn’t matter to the buyer and seller, because these are low volume but high-value transactions. In these cases, throughput is not as important as the security of the overall network.
Q: Your views on the regulatory framework for blockchain? Where do you think they are heading?
A: It’s important that we don’t view regulations as constraints. It is necessary for us to have clarity and understanding of regulations to design and engineer products and solutions that serve the market. Around the world, regulators are giving clarity and guidance, for example, on digital assets and this will help spur innovation and lead to wider adoption.
Take Facebook’s Libra, for instance. The immediate response of many governments after Libra was announced highlights the importance of engaging all stakeholders, and not just the users, the buyers and sellers. Regulators are key to the industry, and we have to understand how every industry stakeholder could be affected and in what ways. From there we can learn how we can work together to ensure this is never a zero-sum game because blockchain has the capability to set-up sustainable win-win situations for all parties involved.