Nasdaq’s senior vice president of enterprise architecture Tom Fay and former JP Morgan executive’s Digital Asset Holdings have both filed for blockchain patents for the settlement of transactions and assets.
The application filed by the Nasdaq executive focused on the methods of recording transactions on a blockchain network.
In theory, Nasdaq’s patent entails a private blockchain network, with which the American stock exchange will be able to run a distributed exchange with digital wallets and an order book. Structurally, the blockchain-based asset exchange replicates the infrastructure of traditional exchanges, but implements the blockchain technology for autonomous operations.
“The exchange stores an order book and a plurality of digital wallets associated with different clients. The computer system receives new data transaction requests that are added to the order book. A match is identified between data transaction requests and hashes associated with the digital wallets associated with the respective data transaction requests are generated,” read the official patent filed earlier this month.
One major advantage of Nasdaq’s digital wallet, match engine, and blockchain-powered private exchange is, the limitation of human labor in the process of matching, settling, and conducting transactions. The blockchain-based platform notifies each party and the counterparties when a match is set, then autonomously carries out blockchain transactions.
Such operation on a closed network will allow Nasdaq to gain control over the settlement of assets and benefit from the decentralized operations of the blockchain system.
The patent application filed by Digital Asset Holdings (DAH) is fundamentally different from Nasdaq’s in the sense that it prioritizes authorization and regulation rather than fast and autonomous settlement of assets.
The complex and sophisticated structure of DAH’s blockchain system consists of nodes that store a complete history of transactions and settlement of assets for further verification and authentication.
“By utilizing a digital asset intermediary electronic settlement platform in accordance with the principles of the present inventive concept, trusted third parties can continue to monitor and exercise behavioral control of digital assets without having to be the legal custodian,” reads a section of the patent.
Despite the similarities in the patent applications of Nasdaq and DAH in that they are both private blockchain networks, the structures of the two systems almost contradict with each other, as Nasdaq’s blockchain system looks into optimizing traditional settlement of assets while DAH’s network prioritizes compliance with external parties.
Considering the increasing interests in enterprise-grade blockchain networks, these patents will define particular purposes of blockchain system that are being implemented onto existing financial platforms. DAH’s regulation-focused platform will highly likely become utilized by major banks and financial institutions hoping to transact using the blockchain technology but with greater transparency.