May 9, 2023 -
Plans to launch Canton Network are released with the promise of a decentralized network infrastructure to create a "network of networks". This network of networks refers to its proposed ability to establish interoperability between previously compartmentalized financial markets. This allows synchronization of assets management for a regulated industry where governance, privacy, permissioning, and controls are paramount. A look at who is involved is a clue to what this means in the grand scheme. Paxos, Goldman Sachs, and Microsoft are a few participants already confirmed along with a host of internationally recognized banking institutions. The implications of this news is not merely hype; rather a signal of what is to come.
In comparison to other blockchains, Canton Network taunts the ability to scale, to improve on privacy with multiple regulated participants, and to maintain control over the network. According to the official Abstract, limitations of existing blockchains prevent the bulk of our world's financial assets to onboard with existing blockchains. Motivation section reads specifically:
- All assets and applications share data publicly and permanently
- Interactions are all-or-nothing
- Applications compete with global network resources
These downsides conflict with existing, unique rules of how business is conducted globally. Enterprise and governments cannot possibly mesh with a permanent public record, in contrast to cryptocurrencies and Non-Fungible Tokens (NFT). The argument continues to suggest that most applications' coding is performed off-chain, negating the verifiability of independent public blockchains.
Scroll a bit further to a section labeled Transactions to find that an Active Contract Set (ACS) is structured as a tree with varying visibility to view each section. New transactions append to the end of transaction graph, where each sub-graph can reference the graph on which it depends and may archive and create another contract. This is known as party view - verified locally by the party's node. As a result, "... no party sees or stores information to which it is not a party. ...parties can transfer digital assets with the confidence that the party transferring the digital asset actually owns that asset while also being certain that no other party on the network will know..."
Can this truly be considered a decentralized network? Given the names of parties already involved, the overarching goal could be to create a similar, albeit more modern banking infrastructure to what is currently available. Large chunks of the network will have reduced visibility to public. "Each application may make different tradeoffs between trust, access control, and operational complexity." The argument for this network as decentralized is simply that it exists virtually across a single, global ledger to facilitate interoperability while maintaining privacy. Will a Central Bank Digital Currency (CBDC) be revealed along with once testing is complete? Canton Network participants begin testing applications and interoperability in July.
"Our enthusiasm is robust as we leverage the Canton Network to collaborate with the world’s largest institutions to design, develop and deliver digital applications that can connect through an innovative blockchain network. This network will be the catalyst for regulated financial institutions to operate together on a grand scale."
Will Womble, CEO, Umbrage
