This is an excerpt. To hear the full interview, click the Youtube link.
Blockchain technology has long been speculated to be a game-changer for the financial industry, but few blockchain firms have positioned themselves better than Setl for actual industry adoption.
Finance Magnates spoke to Peter Randall, CEO of Setl, about the company’s growing role in the financial services sector.
What is Setl?
Peter explained that Setl is an “institutional business based in the financial services sector providing distributed ledger service to business users in financial services.”
While anyone can use Setl, the network is geared toward entities that are responsible for maintaining ledgers. This could be “a bank with a ledger of current accounts, a securities depository as an owner of stocks… there are many different ledgers in financial services.”
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“At the moment,” he said, “they are kept in a slightly different form, which means moving things between them is both cumbersome and expensive, and can be slow. On a distributed ledger, many of those issues go away, and significant process efficiencies can be achieved.”
Setl’s Capacity: 100 Million Wallet Addresses; 80,000 to 100,000 Transactions Per Second
The average person can’t run a node on the Setl network. “Individuals that interact with the Setl blockchain do so by using a wallet that will allow them to submit transactions onto the chain or to receive payments or other obligations from the chain,” Peter said. “The actual consensus operation, the messaging operation, the various sort of housekeeping operations–they are not open to members of the public.”
Peter explained that this is integral to the way that Setl operates: “It’s a very different arrangement [than most blockchains], and also very important for security purposes. It’s also very important for achieving the sorts of speed and capacity that the Setl chain is able to deliver.”
What kind of capacity are we talking about here? “So, for example, the capacity that the Setl chain is able to deliver is–at this moment–about 100 million addresses per block, and we are processing things (at the moment) on a five-second block. You can change that if you wish,” he added.
“We’re doing 80-100,000 transactions per second. So it’s a very different sort of proposition, if you will, to some of the more visible, well-known chains.”
Who’s Using Setl?
“We have a pretty storied list of shareholders, as you have probably seen.” The list includes–but isn’t limited to–Deloitte, Citi, and Credit Agricole. Setl’s largest shareholder, Computershare, “is the world’s largest registrar. They provide registrar services to issuers.”
“We have a good spread of shareholders who are in conversations with us about using this chain. We have chains which are already in production, including one in France which is called ‘IZNES’ (www.iznes.io),” he added.
“I think probably by the middle to the end of next year, we’ll have about $800 billion to $1.2 trillion euros of assets on it, which means that this single chain will be bigger than all the cryptocurrency chains put together.”
It’s not possible to buy Setl tokens–“we don’t use any form of cryptocurrency,” Peter said. “We don’t have, as an actual policy, any form of cryptocurrency in our system. We don’t use tokens, per se, either. We believe that in financial services, people want to receive dollars, euros, pounds, yen, or whatever. They’re not particularly interested in receiving some form of cryptocurrency.”
“So, the native application that we’ve designed for support are currency blocks that are issued by, if you will, central banks or other recognized institutions.”
Interoperability on the Setl Network
“Back in 2016, we were able to show a demonstration in the UK FCA Sandbox Program [where we] were able to take identity information from one chain (not a Setl chain) and then deploy that within a Setl chain and make activity happen,” said Peter.
Peter explained that “what’s very important to a Setl chain’s ability to communicate with other chains is that we can demonstrate provability in the sense that we can move an asset provably off one chain whilst maintaining the cryptographic hygiene of that chain, and then move it onto another chain without compromising the cryptographic integrity of that second chain. So we’ve got provability of that asset transfer, if you will, which is a very important feature.”
Setl: We’re Not Open Source Because “We Want to Sell It”
When Setl was established in 2015, “we sat down and did some thinking about what would be necessary to provide a service in financial services. All of us in the company have a very long financial services background, so quite an extensive knowledge of financial services.”
“We thought, well, one of the things that companies want to do in the post-trade environment (which is where blockchain is most widely suited), they’ve got to do in relatively high speeds. So, 80,000 to 100,000 transactions per second is relatively high speed. Obviously, it’s not as high speed as stock exchanges or organized trading facilities, or any of those sorts of institutions, which are able to do millions of transactions per second. But 100,000 is fine for post-trade.”
Peter also added that you have to be able to address a “multiplicity of ledgers.”
Additionally, “if you’re doing this for financial services companies, [you must] be able to show that the coding has been done to secure coding standards set by people like ISO…this basically requires you to put certain sorts of conditions on the code that you write and the architecture of that code, and of course the people that do the code writing.”
“So, we are studiously not taking any sort of open-source work…it’s very important to us that we have the intellectual property in the service that we’ve developed, because apart from anything else, we want to sell it.”
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