Multichain provides the technology for financial institutions and other large enterprises to build their own blockchains. All they need is API and a command-line interface to integrate a wide range of blockchain features in platforms for enterprise use.
The problem with Bitcoin blockchain and why it poorly fits into the current financial ecosystem is its slowness. Currently, Bitcoin blockchain can process only 300 thousand transactions per day. The fees for transaction verification can also become an issue for a large financial institution that processes thousands of transactions per second.
This technology was pioneered by Coin Science with previous successes including Copyscape plagiarism search engine. The realised that while businesses, particularly in the finance industry, realise the benefits of blockchain technology, they are not exactly jumping to embrace it. The transition reveals that finance industry players are still searching to outline the attributes of the distributed ledger they choose — the secure ledger itself, immutable transactions and payments rail — and those they don’t, especially the mostly unknown miners who verify transactions. In general, the finance industry is busy figuring out solutions that permit them to meet those needs without compromising on compliance.
The trouble with low acceptance, Multichain author Gideon Greenspan argues, wasn’t that financial institutions weren’t interested in blockchain solution, or they enjoyed having lots of intermediaries in financial transactions, but instead they did not believe the distributed ledger technology was sufficiently tested and stable enough to suit their needs.
With this new solution, customers can choose the most essential qualities of their blockchain: whether it would be private or public, how long will it take to verify blocks, how the interaction will happen, who can connect and which actions perform in the blockchain, as well as many other attributes.
Using Multichain financial companies can create their own customised versions of blockchain. Now banks can only perform the actions that are essential to their business and skip the more advanced options if they don’t need them. There are more than 45 key parameters that can be adjusted to the particular needs of the organisation, the white paper says.
Let’s take a look at some of the essential features of Multichain:
Transaction speed: the application can process more than a thousand transactions per second, coming close to the speed of processing of major credit card providers.
Layered permissions: system allows assigning special sets of permissions, for example, empower some users to validate transactions and others to create blocks or other assets in the system. This helps to ensure compliance with financial regulations and also eliminates the need for involving unknown third parties for distributed mining. At the same time, there are verified nodes that can verify the data in the system and communicate with miners as well as verify other nodes.
Centralisation elements: there is a Genesis block, serving as an administrator in the privately distributed ledger, with extended rights in the network and the right to appoint other administrators, among other privileges.
No Proof of Work: there’s an alternative way of approving transactions. Multichain transactions are approved in a rotation, only by permitted miners solving a high complexity of blocks, to prevent users from mining in private and increasing mining diversity. Since there is no permanent order in which transactions should be approved, chances of system abuses in the process of mining are decreased.
Easy deployment: creators of Multichain claim that it only takes three steps to set up a new distributed ledger even for a large enterprise. The smooth learning curve greatly helps to improve adoption of this technology.
Improved flexibility: blockchains are compatible and can communicate with each other in an unlimited number of ways. Bitcoin platform and testnet (where no Bitcoin are transacted) can also be integrated.
While the whole blockchain landscape is still in development, initiatives such as the latest Multichain can help financial organisations adapt distributed ledger to their needs and compliance requirements. As the Bitcoin blockchain develops during the next few years, the growth of private blockchains connected to it will help to build a more global Bitcoin ecosystem.