Blockchain deception by Microsoft, Goldman Sachs and Co.

Better than nothing. This is how one could understand the joint “blockchain” action of the major corporations Microsoft, Goldman Sachs and BNP Paribas. With Canton, more than 30 well-known companies, primarily from the financial sector, have joined forces to form a new blockchain consortium. With the Canton network, one would like to build a kind of Ethereum for corporations, for example to tokenize assets.

However, the Canton blockchain itself should not have its own native token and should not require the participants to surrender control. On the other hand, there should be a smart contract capability and interoperability that is otherwise only known from an Ethereum blockchain. Sounds strange, it is.

Canton Network: Old wine in new bottles

The attempt by large companies to set up their own blockchains is anything but new. After the ICO bubble burst at the end of 2017, some of them were already hoping that it would now be the corporations that would bring the technology to commercial maturity via slimmed-down blockchains. Names like Hyperledger or Corda were buzzing around at the time as consortium alternatives to public blockchains. Now they are hardly talked about anymore. The forgotten millionaire graves never managed to establish themselves.

One reason for this is that the blockchain logic is in many ways diametrically opposed to the centralized, hierarchical control claims of large corporations. As much as one flirts with the advantages of blockchain technology, there is a lack of willingness to accept the structural changes resulting from a higher degree of decentralization and openness.

More DLT than “open blockchain network”

On the website Canton presents the network as the first open blockchain network in which it is still possible to remain in control as a participant. The blockchain community sees things a little differently. Here some have a stomach ache with the use of the term “open blockchain network”.

Rather, the impression is created that it is a DLT infrastructure that only maps partial aspects of a blockchain. Those aspects that make up an open blockchain are not found in the Canton network, or only to a very limited extent.

Who’s in charge?

The lack of incentives via tokens would be problematic. With the Canton Blockchain there are simply none. In theory, anyone can become a Canton Service Provider and contribute as a hub to the consensus mechanism. But the question is why? This shows that only the participating financial groups have an interest in acting as operators.

Real decentralization doesn’t seem to be the intention. The question also arises as to what about interoperability with DeFi protocols, for example. Nothing to read about it. Instead, the impression is created that it is only about the in-house applications of the consortium participants, which are released in a closed circle. Ultimately, this also defines the roles of the participants.

Well intentioned, but…

In principle, the attempt by the financial groups to achieve a new level of programmability and interoperability with the Canton network is commendable. On paper, the Canton network makes perfect sense. Especially since it is understandable that, as a financial group, you are currently only able to make full use of public blockchains to a limited extent. Claims for control, questions of liability, data protection, etc. are often points that nip the implementation of really decentralized applications in the bud within the group.

The label as an open blockchain network, on the other hand, suggests something that is not there. For blockchain enthusiasts, the Canton network looks like a sham. So far, there is no practical example where such a group blockchain initiative was successful. The previous growth, technological innovation and daily billions of US dollars in transaction volumes in the blockchain sector have come from public blockchains such as Ethereum and not from such consortium constructs. Why should it be different this time?

Especially since each of the participating companies has its own goals, needs and challenges that the infrastructure must take into account. Keeping everyone happy and happy will be incredibly difficult to coordinate.

Canton Blockchain: A well-intentioned compromise with modest prospects

Out of pride and stubbornness, the Canton network is going against the times. For example, digital securities have already been successfully issued on an Ethereum, Polygon or Stellar blockchain. So why use a much more restricted Canton blockchain for tokenization and settlement? And thus take the opportunity to access the full spectrum of public DeFi applications and to be able to dock anywhere.

From the outside, this gives the impression that internal conflicts of interest and external expectations are forcing people to compromise. Just don’t risk too much, just don’t offend the supervisory board and shareholders and still show that you take digitization seriously.

An innovation of incremental steps that only tentatively approaches the ideal of real open banking. The actual innovation should therefore continue to come from Ethereum, Polygon, Cardano etc. and not from Canton.