Our Technology

Chorum technology merges the best of breed from the crypto-currency and enterprise blockchain domains.

Blockchain

Blockchain technology is the next step in creating efficiencies in instant transacting, accounting and value transfer for many industries and activities. Companies will use this technology for a wide variety of applications. From payments, to ledger accounting, transaction processing, contract repositories, proof of identity and internal resource management systems.

The technology offers not only a dramatic improvement in the speed, efficiency and security of borderless commerce, but a great improvement in the quality of governance for certain forms of economic activity.


Distributed Governance to remove the central actor

Many vertical markets have trading or collaboration methods which can be made faster and cheaper through the creation of a decentralised system to organise their activity. Historically a new centralised legal entity is created to provide the services back to the industry as a market utility. Good examples of these are stock exchanges and clearing houses in the financial services industry. Over time the market utility tends to drift either towards a piece of unloved market infrastructure, needed by every one but a cost drag to the industry. Conversely some have gained independent shareholders and have exploited their monopolistic market position to gain pricing power over the original founding members.

Blockchain can help these actors to collaborate without creating a bureaucratic centralised legal entity. The next generation of distributed ledgers are adopting the ability to allow the members to govern the market utility. The creation of Distributed Autonomous Organisations (DAOs) which can be seen as mutual societies on a blockchain (‘Digital Mutual’) have been proven to work in the FCA sandbox. These new de-centralised governance structures, built on blockchain, are expected to transform existing market infrastructure across a wide range of industries.


Distributed fees & metering to pay for services

The business model of a centralised actor charging a fee is well understood. Examples such as an auction house charging a fee per lot has been digitised to the internet in the form of eBay. The advent of de-centralised networks, made possible using blockchain, leaves the network with no centralised actor. The advantage is that pricing power and monopolies cannot be achieved but the disadvantage is that we need new methods to incentivise and remunerated service providers to these new networks.

The first generation of new de-centralised networks, initially crypto-currencies, have each implemented a distributed fees mechanism to incentivise and remunerate providers of service to the network. These providers are commonly known as miners because there is an initial reward of new coins and a large amount of computing effort to achieve the reward. This reward is a distraction. The miners are providing the essential service of validating the order of transactions and are paid a small fee for each transaction that they validate. This mechanism is a distributed fees model and can be seen in all emerging blockchain technologies.

The next generation of distributed ledgers are adopting metering rather than mining. In the metering model we return to the familiar notion of paying for what we use. Providers who can show a Proof of Stake or Proof of Performance can offer their services. Consumers of the service are able to select providers and the price is left to the normal market functions. Different de-centralised networks will need different incentives to reward participants providing services to the network. More than one economic model is expected to emerge in order to server the different applications of blockchain.