With all the hype surrounding blockchain, it’s easy to forget that its underlying technology is neither new nor particularly innovative. It is essentially comprised of three components: cryptography, replicating data stores and a peer-to-peer connectivity model. In fact, it is the network of nodes that adds the value by creating immutability, especially if the nodes are at scale and independent.
Distribution is the biggest challenge facing distributed ledger technology (DLT) in the financial sector. The only true production at scale examples are public ledgers such as Bitcoin and Ethereum. Whilst these networks achieve immutability through scale, they are slow and can be expensive. This is because they have been created to define ownership of an asset via proof of work or proof of stake.
Proof of work describes a system that requires a certain amount of effort in order to deter malicious uses of computing power to tamper with the ledger, while proof of stake enables a person to mine or validate block transactions according to how many coins they own. This means that the more coins owned by a miner, the more mining power he or she has. These processes are understandably demanding in terms of processing power and the cost of the underlying cryptocurrency.
There are many firms currently focused on using Bitcoin and Ethereum as networks for storing data to leverage their undoubted strength of immutability. This, however, comes at a cost. With Bitcoin this is around $5 per transaction with a update and synchronisation rate of 18 minutes.
So what are the requirements for a system that can deliver immutability but without these unwanted side effects? We would suggest the following:
- A highly distributed network of open source nodes
- High data throughput
- High-speed synchronisation
- Low operational costs
- Ability to anchor to/link in with all blockchains
Babylon is a distributed verification network that is being created to meet these requirements, guaranteeing immutability for any data set which is secure and readily available at scale.
Babylon achieves this by hashing all data on the network with an SHA-256 based hashing algorithm. All hashed meta data references the underlying record which is then anchored onto the Babylon network and any public or private blockchain if required. Leveraging the widely distributed witness capabilities of multiple networks it can deliver guaranteed immutability of data.
Furthermore, Babylon has been designed to sit inside or outside of firewalls and process over 30 million transactions per second. The nodes will be deployed in the major data centres globally, and it will enable 10,000 nodes to synchronise in under 2 seconds. The company has four patents pending for this innovative technology.
This solution has broad application not just within financial services but in all industries, leveraging the best elements of blockchain technology to improve efficiencies for businesses across the globe.