We were privileged to welcome Soramitsu, a FinTech company based in Tokyo dealing mainly with banks and insurance companies, globally and in Japan, to the Tokyo FinTech Meetup this past week. Soramitsu develops blockchain solutions primarily based on Hyperledger Iroha, which they architected internally and contributed to the The Linux Foundation at the end of 2016.
Being recognized as a key contributor to Hyperledger alongside global giants IBM (contributed Fabric) and Intel (contributed Sawtooth) was quite the coming out party for Soramitsu, and the project hit a major delivery milestone at the beginning of May with the production release of Iroha 1.0, providing new native client libraries deliver cross-application support for desktop/server (on Java, Python, C++) or mobile (iOS, Android (Java)) applications, a novel, asynchronous consensus algorithm supporting one step agreement on votes, and multi-signature transactions.
Blockchain technology in general still lacks strong developer tools and is far from being integrator-friendly. Soramitsu aims to address these deficiencies with the Iroha 1.0 release, thus positioning Iroha as the ideal tool for quick prototyping and experimentation with new business models at a low cost, while the developed solution can still scale, as evidenced by the use case described below.
One aspect of the ease of development, which increases reliability and product quality, are pre-defined smart contract called “Command”, through which digital asset and identity management can be performed by using pre-defined commands in the data model, without writing code.
Use cases of Hyperledger Iroha
Soramitsu has created a prototype of a regional currency called “Moeka” in November 2016 jointly with the University of Tokyo, the University of Aizu, and the International University GLOCOM, as part of research into the creation of a local ecosystem.
Together with the University of Aizu, the company also developed a campus stable coin called “Byacco” that can be used by students at the on-campus store and cafeteria.
In April 2017, the National Bank of Cambodia and Soramitsu started working on a new payment infrastructure for the Kingdom of Cambodia using blockchain, with the goal of creating a digital currency that is usable by both financial institutions and all residents, supporting both US Dollar and Cambodian Riel. Using the technology, anyone with a Cambodian phone number can download a mobile app and access the mobile currency; money can be sent peer-to-peer to another person, and the transaction will be recorded directly on the central bank’s ledger.
With Rakuten Securities, Soramitsu developed a digital identity proof-of-concept to demonstrate the benefits of a digital blockchain-based identity platform: registration is only required once, and access to the validate information can simply be provided when opening additional accounts at other financial institutions or companies.
A generalized version of this is available as Soramitsu Passport, a digital identity management solution, putting the user back in control of how her data is being shared. This solution is compliant with the Decentralized Identifier (DID) standard proposal of the World Wide Web Consortium (W3C).
Smart contracts & digital depository
In insurance, Soramitsu partnered with Japanese insurance giant Sompo to deploy smart contracts for contract management and payment in weather derivative insurance.
Soramitsu, working with the Moscow Exchange, is developing the Decentralized Digital Depository (D3) that enables financial institutions to safely work with digital assets, such as tokens or cryptocurrencies, while ensuring full compliance with the existing regulatory framework. D3’s newly developed “Two-Way Peg Sidechain” acts an an inter-operability layer between different markets and protocols, in this case connecting Russian (NSD, KDD) and Swiss (Lykke) financial markets with the Bitcoin and Ethereum blockchains, for example.
The future of blockchain
Soramitsu believes that blockchains show their true value when they enable the collaboration of information and business processes among multiple organizations. Blockchains will move away from being mere “dumb” payment systems, and migrate towards full-fledged economies driven by decentralized autonomous organizations (DAOs). New technologies like Polkadot, Cosmos, or Soramitsu’s own D3 can enable new systems that can be linked together so that system construction can fit the political reality of a diverse landscape that financial institutions are faced with.
Interoperability accelerates interconnecting various blockchains just like the Internet. The interconnected blockchain becomes a “Trusted Internet” that can transfer value and cannot be tampered with.
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