‘Blockchain, not Bitcoin’ is Dead? Australian Bourse Cans DLT Shift

The Australian Securities Exchange spent around $170 million in hopes of replacing its aging settlement layer with a blockchain

article-image

ASX Building, Sydney | Credit: Shutterstock

share

The Australian Securities Exchange (ASX) has placed a blockchain system (DLT) intended to upgrade its aging settlement layer on indefinite hold after three years of development.

The move marks the end of what was to be one of the most impactful implementations of distributed ledger technology — business-speak for enterprise blockchain — to date.

In a statement on Wednesday, ASX said its DLT, once pegged to replace its 25-year-old Clearing House Electronic Subregister System (CHESS), simply didn’t measure up.

ASX inked a three-party memorandum of understanding in 2019 with enterprise blockchain firm Digital Asset and cloud computing giant VMware to build the software.

Between 245 million and 255 million Australian dollars ($165 million to $171 million) spent on developing the DLT will be scrubbed from ASX’s balance sheet starting next year, a spokesperson told Blockworks.

The funds were previously listed as a financial asset or liability. ASX doesn’t expect the outcome to impact the company’s dividends.

DLTs are private (permissioned) blockchain-powered networks; databases involving multiple vetted parties across multiple trusted nodes, which process actions within a closed system. 

Large companies and other institutions have gravitated towards DLT solutions rather than permissionless blockchains, as they award supreme power and control over the networks they support, with “blockchain, not Bitcoin” the mantra for many over the past five years.

Compare that with public (permissionless) blockchain systems such as Bitcoin and Ethereum. These networks have no central power and allow anyone at all (with the right equipment) to join, validate and otherwise participate in the network.

The ASX spokesperson said that while current activities on the project have been paused, it has not definitively ruled out a DLT implementation in the future. 

“As we revisit solution design we will go back with an open mind,” the spokesperson said. “We will evaluate a number of options and we will work with both [Digital Asset] and VMware in those investigations.” 

ASX repeatedly pushed back its DLT blockchain system

The Australian bourse, which handles clearing, settlement and registration of securities and equities in the country, first began exploring options to replace CHESS more than seven years ago. 

Toward the end of 2018, DLT was tipped as the technology of choice to help modernize its systems, leading to a formal agreement to develop a blockchain-based solution a year later.

Some ASX customers initially balked at the idea, complaining that the blockchain implementation could ultimately fail. The exchange delayed the implementation several times due to concerns over exactly how the new system would function. 

The transition was initially slated to go live in 2020. Citing significant challenges posed by the design, ASX’s decision to can its DLT stemmed from a review undertaken by IT consulting giant Accenture, which was started in August this year and issued earlier this month.

Accenture said distributed systems introduce higher latency, exacerbated by multiple layers including client nodes, CHESS’ application and the ledger itself, where transactional data is stored.


Get the day’s top crypto news and insights delivered to your email every evening. Subscribe to Blockworks’ free newsletter now.


Want alpha sent directly to your inbox? Get degen trade ideas, governance updates, token performance, can’t-miss tweets and more from Blockworks Research’s Daily Debrief.


Can’t wait? Get our news the fastest way possible. Join us on Telegram and follow us on Google News.


Tags

upcoming event

MON - WED, MARCH 18 - 20, 2024

Digital Asset Summit (DAS) is returning March 2024. This year’s event will be held in our nation’s capital, where industry leaders, policymakers, and institutional experts will come together to discuss the latest developments and challenges in the ever-evolving world of cryptocurrency. […]

upcoming event

MON - WED, SEPT. 11 - 13, 2023

2022 was a meme.Skeptics danced, believers believed.Eventually, newcomers turned away, drained of liquidity and hope.Now, the tide is shifting and it’s time to rebuild. Permissionless II is the brainchild of Blockworks and Bankless. It’s not just a conference, but a call […]

recent research

Cosmos Hub: ATOM Economic Zone

Research

Replicated Security, the Hub’s Validation-as-a-Service offering that went live in March, is the first step in bringing value accrual to ATOM stakers.

/

article-image

Bitcoin price predictions are meaningless, so let’s expend our prediction energy on something that actually matters

article-image

A new complaint against Elon Musk and Tesla alleges that Musk manipulated both bitcoin and dogecoin

article-image

Kenya’s central bank doesn’t seem enamored by the idea of a CBDC but hasn’t slammed the door shut yet

article-image

Both Ethereum and Solana have enjoyed vibrant DeFi environments, but this has not yet been the case for Cosmos

article-image

As Japan takes important step forward on stablecoins, industry participants say, proposed US laws around such crypto assets remain in flux

article-image

Stablecoins offer global financial access and on-chain transactions without limitations, while FedNow falls short in terms of utility, global reach and inclusivity