Canton Network, ‘a network of networks’, is striving to become the most suitable blockchain for financial institutions. Some of the network’s participants are SBI Digital Asset Holdings, Goldman Sachs, Microsoft, Deloitte, BNP Paribas, ASX, and other key figures in the financial industry.
But why are such networks have an edge over publicly available decentralized networks? How are they better?
Limitations of Public Networks
Canton Network believes that the current smart contracts fail to attract financial institutions for several reasons.
Indeed, in today’s markets, projects compete for resources. If one project is demanding greater resources, it often reflects in the network fees. Ethereum is a great example of it. When Yuga Labs launched the Otherside land NFTs, Ethereum gas fees spiked over $100.
Another concern is that all data is publicly shared and available to all. Having confidential data publicly accessible is less desired by financial firms.
Canton Network is overcoming these limitations by using the Dami modeling language. Dami offers privacy to every asset or piece of information (sub-transaction privacy). In other words, privacy is applied to a public chain (like Zcash).
Additionally, Canton uses horizontal scaling, which means there are no limits on how many transactions can take place per second (TPS). The testnet is expected to launch in July 2023.
Permission and Permissionless
Canton Network is a permissioned blockchain (also known as a private blockchain). While part of the network is decentralized, it is controlled by private entities. While there are benefits to a permissioned network, such as privacy, scalability, and customizability, there is less transparency.
Permissionless blockchains are quite popular for DeFi projects. However, the reason why Canton Network chose a permissioned chain seems because of US regulations. Matthew McDermott, the Head of Digital Assets at Goldman Sachs hinted it may be the case at the Crypto Assets Conference, saying: “I’ll speak from a highly regulated U.S. bank. We are not allowed to do anything on a public blockchain, be it permissionless or otherwise.”
“The rationale being safety and soundness. Most of the development you will see certainly from the U.S. banks, JP Morgan, ourselves and many…
