Bitcoin 2.0: Eris is talking to banks first and worrying about revenues later

Eris Industries, the smart contracts blockchain platform, says it's currently inundated with tier one banks, but is still exploring where its actual business model might lie.

Brian Fabian Crain, head of business development, Eris told IBTimes: "So we haven't got a proven business model that we know like, this is where we are going to go.

"We do have some early revenue. Let's put it like this - this is all very new so it is unclear where it is going and it is unclear where blockchains will have the most utility and the most impact.

"So we are fairly open to and are exploring our customers - I think everybody is kind of exploring."

Eris emerged as fork of Ethereum and as such its core competency is the code based execution of smart contracts, the sort of thing that fills the world's registries in the form of centralised databases or on paper.

Crain said at the moment there is a lot of interest from banks and financials. "So naturally that is where we put some focus but doesn't mean it's going to stay that way.

"And it doesn't mean that this is something that is being built for banks. It happens to be something that is getting particular attention by banks at the moment."

"We work with a few large banks. I'm sure you would know the names of, but unfortunately we have NDAs so can't say who and can't say what we are working on."

IBTimes asked if a developer requires any specialist knowledge of the way financial contracts operate to spin out a system that financials may be interested in.

"Of course if you are going to do default swaps or something then, you should have the knowledge of how financial markets work.

"Maybe doing something like that on a system like Eris would help in some ways: maybe it would make it easier for banks to settle things, cut down on costs, maybe make them more efficient.

"Our goal is really just to get a lot of companies on top of Eris in whatever way they want and then in the future we may build some parts around that.

"So far there aren't any, but in the future there maybe things to help people build and that could be some way to make money.

Ethereum

Ethereum is often described as an archetype of Bitcoin 2.0 technology, and has stated its goal is to "decentralise the internet". It comprises an open, Turing-complete contract language with its own currency unit – ether – to incentivise participants.

Crain said; "The thing with Ethereum is that it's censorship resistant so nobody can control what runs on it.

"Of course people will do great things and I'm sure people will do things that would be totally illegal if they were done anywhere else. It's a great project.

"But what we focus on is something else. We are building software that then people can take and do their own blockchains in whatever context.

"So if you don't like the design features of Etrhereum - you want to do something maybe with more performance or different features, you can do that.

"Or if you want to control what is on there, if you don't want to have some applications that would be illegal stuff like that.

"As an enterprise you are going to care about that. You are going to want control. That is possible with Eris. You cannot control what goes on Ethereum."

Crain added that whereas Ethereum employs proof of work mining, Eris allows developers to set this to their own requirements.

He said a group of ten banks might together agree they will operate their blockchain one way, while another community might choose a few people to administrate a system.

"Anything is possible. Our thesis is that the right way to do it will depend on the process. There isn't one way the works for every use case."

Everledger

Crain said this opens up the possibility of hybrid systems involving private blockchains and public blockchains like Bitcoin or Ethereum.

"Maybe there is some data that you don't want have public but you still want to have a public record, public proof of existence.

"So you could have a private chain that does its own blockchain and then put some of that data encrypted on the public blockchain," he said.

Everledger, which verifies and tracks the life cycle of diamonds uses such a system. It holds certain private, company specific data on a permissioned shared ledger, but also has data on the Bitcoin network.

"You can assume that the people running that chain want to be running that chain. And then when it comes to the public chain you just pay the normal transaction fees. In the case of Everledger they are using bitcoin," said Crain.

There are some simple techniques which can be deployed to secure permissioned blockchains like rotation mining patterns and selecting beforehand who validates.

Bitcoin

"Is that more or less secure than a public chain?" asked Crain. "It depends. If you could get a thousand different parties doing the validating maybe it could be even more secure than Bitcoin, who knows.

"Bitcoin has had a great security record for the six years people have been on it, but I don't think you can say that proof of work will always be more secure.

"Today you have very big Bitcoin mining pools. Let's say you took the top 30 pools and made each a validator of the chain - now you would have 30 different parties validating the chain and let's say you gave the same wage to each of those parties.

"Actually, you would have more decentralisatuion than you do with Bitcoin mining pools right now."