While enterprises have generally been more conservative when it comes to cryptocurrency, one of the market’s key players, the Hyperledger consortium, appears to be opening its code to edgier pursuits.
Revealed exclusively to CoinBazz this week, the Sovrin Foundation, creator of the Hyperledger Indy codebase for digital identity management (and a Hyperledger group member since 2016), intends to become one of the first to raise money by launching a crypto token using the consortium’s code this summer, effectively following through on a promise first detailed in a white paper last year.
That news may come as a surprise for those who have been following the Hyperledger consortium since it was launched under the Linux Foundation in 2015, at the time seeking to provide a repository for the many private blockchain codebases in-development at firms including IBM, State Street and more.
But running more open ICOs on the codebases under the Hyperledger umbrella has been theorized before.
Hyperledger executive director Brian Behlendorf told CoinBazz several projects are talking about launching tokens on top of the multiple codebases overseen by the group, including Sawtooth (which was contributed by Intel) and Fabric (which was contributed by IBM).
For instance, PokitDok, a healthcare API platform exploring blockchains, recently began researching launching an ERC-20 token, the ethereum standard for crypto tokens, on top of Sawtooth, Behlendorf said.
“In theory, we could even use standards developed in the ethereum community for doing tokens on top of other ledgers,” he continued.
And with distributed ledger consortium R3 and some of its member banks testing out Hyperledger Indy, could it be that financial institutions are ready to adopt a tool that’s sometimes run afoul with global regulators?
While it’s speculative at this point, Dr Phillip Windley, chair of the Sovrin Foundation, said he doesn’t anticipate banks having a problem with a crypto token – not only purchasing it from Sovrin but using it to pay other banks in their network in order to facilitate a more streamlined business.
He told CoinBazz:
“I don’t think banks are going to mind paying based on the fact that it’s going to save them from having to do a lot of work themselves. So will the banks use a token for that? Well that is the mechanism we are given them for making payments so we hope the answer is yes.”
A market for protocols
Stepping back, Sovrin believes tokens running on an open blockchain can serve as a key ingredient to its distributed identity network, one that will offer a greater functionality than a permissioned blockchain.
Under its proposed design, any identity claim verification will cost some nominal amount (on the order of a penny or so), which will then be payable in the token. Higher value claims verifications, such as college transcript requests, would cost more and involve incentivizing the network to confirm the data.
Currently, the only option for paying for verifiable credentials is traditional payment systems, but this approach has proved cumbersome and limits the market to only the highest-value credentials.
“Tokens are a little bit of Brave New World,” said Windley.
And they are, but a new world that Windley thinks will solve some of the incentive problems that have made centralized systems better bets than decentralized systems in the past.
“In 10 years, we are going to look at it and it’s just going to be natural for protocols to have tokens on them and for people to be talking about the incentive and disincentives of how to create the markets within which they operate,” he said. “Markets are one of the main ways we organize society – why would we say it’s the wrong way to build technology.”
Sovrin’s token will also be used to pay Sovrin stewards who validate and write data to the ledger, plus as an anti-spam measure to disincentive writing bad information to the ledger.
And despite the controversy surrounding ICOs at this time – whether it be the regulatory uncertainty or the scammy nature of many crypto tokens – Windley said that Sovrin has experienced no pushback from its partners so far.
“All of our partners kind of nod and say, ‘We get it,'” Windley said.
‘The gateway drug’
The idea of untangling digital identity has been a popular one, and it seems as if it’s been making some headway recently.
For instance, Behlendorf and representatives from the Sovrin Foundation met with other digital identity specialists in Mountain View, California, last week for the talismanic gathering, the Internet Identity Workshop.
During the event, Sovrin announced that IBM is joining a group of nearly two dozen stewards of the platform.
What seems most compelling to Hyperledger’s Behlendorf, though, is probing the edges of what “permissioned” means when it comes to blockchain innovation.
“How do we make it so that if you are a bank and you want to join a banking network, the technical ability to join the banking network is low, and the regulatory restrictions should be as simple if not simpler than we have today,” he said. “That should be the way we judge if these networks are sufficiently transparent and sufficiently open. There will be different answers to that question.”
One of those answers could be crypto tokens, although others – like the W3C veterans who recently launched Veres One – have opposing views about the drive to ICO.
Indeed, Behlendorf and the team at Hyperledger remain “sympathetic” to the interest in ICOs, but don’t see a future where Hyperledger itself issues a crypto token.
Still, Behlendorf is excited about pushing the notion of a “permissioned public blockchain network topology” into uncharted territory.