Forkast.News Senior Editor Sam Reynolds talks to Digital Asset CEO Yuval Rooz on the sidelines of Hong Kong FinTech Week 2019 to find out how smart contracts can be developed independently to work any blockchain platform.
Digital Asset works with companies to create business applications through Distributed Ledger Technology. Their smart-contract programming language, Digital Asset Modeling Language (DAML), is designed to automate transactions as well as digitize agreements.
Different from other languages used to develop smart contracts, such as Ethereum’s Solidity and Bitcoin’s Script, DAML is meant to allow developers to create tools without needing to use a specific language for each iteration of the product on different blockchains.
The Australian Securities Exchange plans to replace its Clearing House Electronic Subregister System with a system built on DAML by 2021 to manage stocks, clear and settle trades. Proponents of transaction data stored using blockchain say it can be tamper-proof, easier to track, and faster than conventional systems.
Australian firms paying fees for investment services could also save money through the move by cutting out such third party services. According to a report by financial information firm Rainmaker, “fees paid by members to super funds in Australia in 2015 were AUD$23 billion, a significant amount of money by any measure.”
Nasdaq, the London Stock Exchange, and the Japan Exchange Group are also experimenting with using blockchain.
Sam Reynolds: Hey, we’re talking with Yuval Rooz, Digital Asset. Now Yuval, you guys are big into DLT and trying to disrupt that sector. Tell us more about your work in Australia with the exchange down there.
Yuval Rooz: Yeah so, before we talk about Australia, I think that it’s important to know what we do at Digital Asset to kind of give a bit of context. So we started in 2014 when the whole space started evolving. And what we focus on is building a blockchain, building a smart contract. But what we’ve started seeing throughout the years is that the industry is bifurcating. So if you want to build an application on fabric, it’s going to look one way. If it’s going to be in Corda, it’s going to look one way. Or if you’re going to build it on Ethereum, it’s going to look something completely different, even though the product itself can be the same product from a functional perspective. So what we’ve done is we’ve built a smart contract language that effectively abstracts away all of the complexity of blockchain and effectively allows the customers to really focus about the product that they’re trying to build. And what we’ve done with that is we effectively contracted with the Australian Securities Exchange, which the project we’re doing with them is effectively replacing all of clearing settlement sub registry of Australian cash equity. So what does it mean in practice? In and 2020, we’re entering production testing where every security in Australia, every cash equity in Australia is actually going to be managed and tracked in real time on a blockchain. That is huge. Australia is a G10 country.
Sam Reynolds: Well, that is massive. And you mentioned earlier about how your technology allows the user to define their workflow first and pick the technology later. Just like in the enterprise sector, you wouldn’t decide whether you want to use Hadoop or Apache or AWS or Microsoft. You define your workflow first, right? So you make sure that companies don’t have to define themselves against Ethereum, or hyper ledger. Rather, they work with what’s best for them.
Yuval Rooz: Right. So again, if you know what we are seeing and what we want to create is the equivalent of what you’re seeing in today’s world with technology, which is; you are a business, you identify an opportunity or an area to improve. You sit down with your business, people with you are subject matter experts with your product people. And you say to yourself, well, what are we doing to improve our business or create a new opportunity? What we are doing with our smart contract language, is we are saying you could actually start working on it right right away. And what we’re going to give you is the certainty that once you wrote it with our smart contract, you’ll be able to then deploy it on the right technology. So today, when you’re building an application on a SQL database, the first question that you ask yourself is not are we going to use Oracle, postgreSQL, IBM, DB2? No. The first question that you ask yourself is what is the product that we’re going to build? So effectively, that’s what we’re trying to do at Digital Asset.
Sam Reynolds: I guess with blockchain, one barrier would be developers, right? They might say, I don’t know blockchain, but with your technology, you can work around that. Say, look, the developers first blockchain expert second.
Yuval Rooz: Or blockchain experts not needed. So if you think about like on the front space, like Web sites, today you don’t even need to know what html is or what is CSS or a lot of these technologies. A lot of the companies abstracted that away from the users. We’re trying to create the same experience. I mean, if you think about building an exchange or building a supply chain product on traditional technology using Java SQL database, all plain vanilla technology is complicated. So now you’re going to introduce and say, let’s build it in a distributed manner. Adding all that level of complexity is not expediting development. It’s actually slowing it down. So in today’s world, actually, that is true. You need to have if you’re trying to build something on Fabric, you need to have an expert that understand the inner works of Fabric. So you’ll be able to build a product that actually is safe, private, secured, and that is complicated. That’s not easy. So if anything, you’re hindering innovation. Because you’re saying to your developer who needs to build an already complicated product. Now you need to understand this additional level set of complexities. What we’re saying is, no, we want you to understand that now you can design a distributed system. Our language is tailored for distributed systems. Just describe how the product behaves, who is allowed to do what under what scenarios. And we will take care of executing it on a blockchain without you needing even to know how.
Sam Reynolds: So the big story, it seems like it’s not about the Australian stock market. That’s fantastic, by the way, but more about disrupting the market for coding and enterprise development with your technology.
Yuval Rooz: Yeah. So a Digital Asset we’re all about the developer experience. I mean, we’re so focused on the development and how they experience developing applications. We’re actually starting to see now developers that are building applications using our smart contract language for just traditional products. We have now two clients that have signed up that are developing just a fintech startup. Nothing to do with blockchain. Nothing to do with DLT. But just because they realize that by using our language, they can describe their business in a much more efficient and fast way. So we’re very much interested in changing the paradigm, how you’re doing software development. And we came from a distributed or blockchain background. We’re very focused on aligning developers to develop blockchain applications more efficiently. But I think the story is much bigger than that.
Sam Reynolds: So looking at your competitors in the market, who do you compete with is Neo? Is it Ethereum or is it neither? More like an IBM or Accenture?
Yuval Rooz: No, Accenture is a very good partner of ours, actually there’s many Accenture developers that know how to use our language. We’re actually working on a few opportunities together with them where they are actually using our language to build applications for the client. Who are our competitors? That’s a good question. I think that there is there’s there’s not really an offering today that says, there are a few that are entering space now that are saying you should create a smart contract language that is platform agnostic. I guess you can say that Solidity is a competitor to us, but Solidity is trying to solve a very specific problem, which is how do you build decentralized applications on top of Ethereum? We’re actually proving that you can compile down to Ethereum, but at the same time you can compile it down to Corda or to Fabric or to Sawtooth. So we’re actually trying to give you a very uniform developer experience, independent of what is the technology that you’re using.
Sam Reynolds: Well, I guess, you know, with that comes the fact you aren’t reliant on one blockchain. So Ethereum has their new version coming out soon. But it also has its controversies around it. There are people that aren’t really, you know, big fans of where they’re going.
Yuval Rooz: From my perspective, to me it doesn’t really matter if I agree or disagree with Ethereum. I still think that they are going to have success. And what we’re trying to do is we’re trying. You know, you’re seeing a lot of innovation on the Ethereum platform. But I actually think that some of the tools that are being used are not mature for that amount of capital that they’re actually putting at risk. So actually, what we want to see is how do you give developers that do want to innovate on the Ethereum platform the right tools for the task? So like I said, we’re very focused on developer experience and abstracting away some of these complexities. And we believe that actually by using DAML even on Ethereum, you’ll be able to innovate and reduce some of the risk associated with some of these, you would call it use cases, but some of these use cases put real, real capital at risk.
Sam Reynolds: Your comment about Ethereum’s problem with maturity is actually quite interesting. So what do you see as the problem there? What is lacking right now with that toolkit?
Yuval Rooz: Listen, I think that Solidity, for example, is not a mature product. It’s not a mature language. There is there’s a lot of innovation happening in that space. But I think that from a language perspective, it’s been proven that there’s just so many vulnerabilities. For us, from day one, vulnerabilities, you know, security analysis of the language, some of the static analysis tools that come with the language, some of the testing systems that come with the language. Again, we’re just very focused on this one product where in Ethereum there’s just a lot… You know, Joe was just on a panel with me and he laid down a pretty, pretty ambitious vision, which is very exciting. But it requires a lot of things to work well together. So I actually think that we could actually help some of that ambitious program. But I think that right now a lot of these tools are very thin and some of them are not, in my opinion, ready for prime time, especially not with some of the projects that they’re trying to do this stuff.
Sam Reynolds: Ok. So last question. We’re here at Hong Kong FinTech Week, what are the big trends you’re seeing on the show floor?
Yuval Rooz: Well, so I think that the interesting thing and that to me is a good thing is that it’s not all blockchain, but there is a lot of it. I think that A.I., it’s funny how people talk about regulation and blockchain and it’s going to disrupt. But there’s still not a lot of conversation about regulation of A.I. But, you know, you’re starting to see some of those conversations coming up. So, you know, it’s a good mix between big data. A.I., blockchain is still, and virtual assets are are taking a lot of attention. I mean, the keynote before us started talking about regulation that is coming to Hong Kong about virtual assets. Now that’s a big deal. And I think it’s a good thing. You know, I mentioned on the panel how everybody talks about blockchain banking the unbanked. And so far, everything that you’ve seen, especially in ICOs, and those kind of products, is how do we take advantage of the unbanked?
Sam Reynolds: I mean, surely with blockchain, you know, it evolved from once the Wild West, its libertarian Wild West to now a product used by the Australia Stock Exchange or other companies of certain scale. That’s a great thing, I assume, and great for you guys, which are really building up the maturity of blockchain.
Yuval Rooz: Yeah, absolutely. But I do think that there is still a good amount of noise of things that are not productive in this space and that are actually adding a lot of… So we’re focused on the enterprise blockchain. Sometimes things in the public blockchain ICO markets, because of lack of education, suddenly hinder some of the effort in the enterprise blockchain. And that’s why I’m saying that seeing more regulation and more like really thinking about what are the products that you’re going to launch, whether they are public blockchains or private blockchain, how are they affecting the users really thinking about the risk, not not trying to prevent innovation, but also thinking about what is this innovation doing? What are the risks associated with it? It’s going to be a good thing for this space and it’s going to help actually innovation in the long run.
Sam Reynolds: Great. Well, thanks for your time.
Yuval Rooz: Thank you, Sam.