InterChainZ Project Summary

Mutual Distributed Ledgers (MDLs) have the potential to transform the way people and organisations handle identity, transaction, and debt information. The ability to have a globally available, verifiable, and untamperable source of data provides anyone wishing to provide trusted third party services, i.e. most financial services firms, the ability to do so cheaply and robustly.

Blockchain technology is a form of MDL. The technical success and excitement surrounding Bitcoin’s distributed ledger, ‘the blockchain’, has convinced doubters that distributed ledgers can work securely in harsh environments and, while a bit complicated, can work commercially.  People are now exploring in earnest applications for traditional financial markets – transforming custody products, helping in wholesale insurance deal rooms, providing consolidated tapes or price reporting, reducing systemically important financial institution (SIFI) “too big to fail” risk, reducing pricing monopolies, providing greater data persistence, improving transparency, collateral management, etc.

MDL technology provides an electronic public transaction record of integrity without central ownership.  The transaction record is a ledger of all transactions that have taken place within a set protocol, recorded in a sophisticated, distributed data structure. The data structure is decentralised and shared by all nodes, i.e. computers, within the participating system or network. Cryptography and block validation prevent duplicate transactions, double-spending, and ensures ledger integrity. MDLs can contain sets of documents and record assets. In short, an MDL is a secure peer-to-peer ledger with storage analogous to peer-to-peer file sharing systems such as Gnutella, “Gnutella for accountants”.

The InterChainZ project was a consortium research project to share learning on MDLs.  Based on work dating back to 1996, Z/Yen led the research project. The research partners were Suncorp, a major Australian insurance company, PwC, an international accountancy firm, and DueDil, a credit risk and information firm. The States of Alderney were a regulatory observer to the project. InterChainZ showcased several distributed ledger configurations and numerous variants, exploring how they might work in a set of agreed ‘use cases’ covering:

  • KYC/AML identity management;
  • sharing corporate credit data;
  • placing a small business insurance policy;
  • placing a motor insurance policy.

The project ran from 1 June 2015 to 30 September 2015.  Along with this report the outputs were a series of functioning, interlinked MDLs along with software, explanatory materials and website information.