SAN MATEO, Ca. — Coinprism has released an enterprise-ready blockchain technology called “Openchain.” In contrast to Bitcoin, the service enables companies and institutions to set up their own Openchains that are also interoperable with each other. The company has forged new technology into the crypto-industry and traditional finance with colored coins, as well as the Open Asset technology used by NASDAQ. This new release brings another powerful system of account to the ever changing FinTech environment.
Founder & CEO of Coinprism, Flavien Charlon told Bitcoin.com,
“The primary function of Openchain is to act as a cryptographic ledger, much like the Bitcoin Blockchain. However, while the Bitcoin Blockchain is used to track ownership of Bitcoins, a decentralized asset, Openchain is used to track ownership in real-world assets.”
Charlon tells us that the new service has a lot of innovation regarding the way accounting is handled. He says, “For example, one of the features exclusive to Openchain is a hierarchical account system. Openchain can be seen as a hybrid between a computer file system and a double-entry accounting system. This is particularly suited for corporations as they are inherently hierarchical, so this fits nicely their structure.” The team believes that public ledger systems can be problematic for financial institutions because transaction validation is done by “unknown” third parties like miners. With Openchain, the distributing business will retain full control over these validations, making it less cumbersome for unique organizations. Institutions can benefit quite a bit with the concepts of blockchain technology by cutting costs and producing additional security with unique transparency by offering cryptographically insured transactions.
With Openchain’s hierarchical account system, it acts as a hybrid between a filing arrangement and double-entry protocol. This method of account offers business administrators a way to define their companies’ rules in order to adjust to AML/KYC policies and enable various permission setting within accounts. Openchain feels it simplifies the process with a trust-based consensus and real-time transaction validation.
Charlon says that, “Openchain is very generic and can be used for many applications, from gift cards, to securities, to land titles, but financial institutions are the ones who could benefit the most from Openchain.” he explains “Since the financial crisis of 2008, regulators have increased reporting and auditing requirements for those institutions. A lot of their processes are manual, error-prone, and require reconciliation across many different systems. By using Openchain as their settlement layer, they no longer need reconciliation, which could save billions of dollars across the industry. Also, the fact that data is transparent and exposed through a unified API means that reporting can be automated, resulting in further savings.”
Even though Openchain can work separately from any crypto-system, it’s possible to use smart contracts and create a two-way peg with the Bitcoin blockchain. This in turn enables Openchain to basically act as a federated sidechain that coexists with both Bitcoin and Open Assets. The team asserts that instead of using an architecture like Ethereum, which they call “monolithic,” the idea is to implement Openchain external modules.
In the future, the desire is to build a functional smart-contract app store that can allow developers to monetize their builds. The company says the project is entirely open source and located on Github as of today, and Coinprism is offering a test wallet for Openchain’s features. Coinprism also says that several companies are currently testing the protocol internally. When discussing the project with the Founder, Flavien Charlon, we asked him how Openchain’s protocol works around scalability issues involved with Bitcoin’s blockchain. Charlon told us,
“First, it’s important to note that unlike most alternatives, Openchain is not a fork of Bitcoin, although the learnings of the six years of existence of Bitcoin have been very useful during its design. Openchain is built from the ground up, and has a few key differences with Bitcoin, that make it much more scalable. The system doesn’t use proof of work. Proof of work forces a large number of nodes, distributed across the planet, to come to a consensus, which is a slow process. Proof of work is absolutely necessary when trying to build a decentralized currency like Bitcoin, however it is not needed when representing real-world assets. Proof of work is also very unecological. By eliminating proof of work, we can make Openchain scale to thousands of transactions per seconds.
“Secondly, because Openchain is not based on Bitcoin, it doesn’t even use the concept of blocks. Transactions are directly chained with one another, and they are no longer grouped in blocks. Having to group transactions in blocks introduces a delay. Even if some systems manage to reduce the block time to just a few seconds, a few seconds is still a long time for latency-sensitive applications, such as trading. In Openchain, transactions are linked to the chain as soon as they are submitted to the network. As a result Openchain offers real-time confirmations. That really opens up the number of applications for which it can be used.”
Coinprism has been creating innovations since its inception. Charlon is an ex-Microsoft software engineer who has defined a different addition to the land of distributed ledgers with colored coin and Open Asset technology. The company started in 2014 and is continuing its progression within the industry, and is backed by Blockchain startup accelerator Boost VC and Draper Associates. Bitcoin.com will be watching this service as it develops, and keep our readers informed.
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Images courtesy of Coinprism, Shutterstock and Redmemes