Breaking the Hyperledger - Part 1: Significance/Defense (Non-Technical)

Introduction and Defense of Significance

The Hyperledger Project is a project of the Linux Foundation focusing on the application of blockchain technology at a global commercial scale that is currently being used by multiple leaders in the finance and technology industries including Cisco, Nasdaq, IBM, Goldman Sachs, and the Depository Trust and Clearing Corporation (DTCC, scheduled for early 2019). This group of targets was chosen due to their predicted influence over world matters, especially in the field of investments and security trading, combined with the sudden adoption of technology that is still in its early stages.

The main defense of public interest lies in the adoption of the Hyperledger platform on behalf of the DTCC, which controls 98% of the world’s credit default swap securities through a project known as the Trade Information Warehouse and mediates a market of $11 trillion per year under the direction of Robert Palatnick. “The Warehouse provides life cycle event processing services for approximately 98% of all credit derivative transactions in the global marketplace.” A comprehensive chart of other confirmed participants is provided by the IEEE:

The specific platform in construction for use by the DTCC is a project under development of Axoni, which is neither a member nor a direct  partner of the Hyperledger Project. However, according to the IEEE’s comment on the development:

DTCC said Axoni’s software posted a 100 percent success rate in achieving the desired result in each test. Once the project goes live, all the Axoni code, or “secret sauce” as Palatnick calls it, will be placed in escrow or submitted to the open-⁠source Hyperledger project, so that if Axoni goes out of business, the trading of swaps can continue.

-Amy Nordrum, IEEE

Additionally, during the SEC Investor Advisory Committee Meeting headed by Michael Bodson, DTCC President and CEO, on October 12, 2017 at Washington, D.C., the following statement was made:

Last year, we selected IBM, in partnership with Axoni and R3, to provide a DLT framework to drive further improvements in derivatives post-trade lifecycle events. The firms are working collaboratively, building a derivatives distributed ledger solution for post-trade processing based on existing Trade Information Warehouse capabilities and interfaces with technology providers and market participants.

-Bodson, DTCC, SE Investor Advisory Committee 

This statement suggests that not only is the Hyperledger being used as a backup, but IBM’s implementation, along with the variants of R3, are a significant foundation for DTCC’s project. This implies that while Axoni does have a form of control over the software that is set to be in use, the main base of the project is likely to be Hyperledger Fabric (see Part 2). In addition, Bodson suggested a larger involvement in the financial space than initially stated in Palatnick’s project explanation in the following:

Our three Systemically Important Financial Market Utilities, DTC, FICC, and NSCC, processed securities transactions last year valued at approximately $1.5 quadrillion.

-Bodson, DTCC, SEC Investor Advisory Committee 

This further accentuates the importance of the target (DTCC), its soundness, and its implementations of the Hyperledger Project.

The DTCC released a project update on March 31, 2018 that sets the final live release date to late January or early February of 2019: 

The following parts will contain attempts to attack the Hyperledger in various ways. Whether any of them will be successful or not, I can't say; but track record says yes.