The U.S. Federal Reserve Endorsed an Ethereum-based Alternative to LIBOR - The Daily Gwei #1
The U.S. Federal Reserve Endorsed an Ethereum-based Alternative to LIBOR - The Daily Gwei #1
No, you’re not going crazy, the logo did change from yesterday for… reasons! It may change again - maybe it’ll turn into a game of who can spot the logo change every day - brand awareness be damned!
A couple of days ago, it came to light that Federal Reserve Board Chairman Jerome H. Powell provided a statement regarding a new system called AMERIBOR that aims to replace LIBOR - a benchmark interest rate index that is used by world banks. This new system uses a permissioned (private) version of the Ethereum blockchain to capture interbank lending rates.
Yes, you read that right - the United States Federal Reserve is endorsing a new system that uses Ethereum’s technology to build a replacement to LIBOR - feels like this should of been bigger news, right?
Now, some of you might be thinking “so what, it’s not public Ethereum, is it really that important?” Well, that’s missing the forest for the trees my young Ethereans.
As much as we’d like them to, large institutions aren’t going to deploy to the public Ethereum mainnet for the time being for many reasons (scale, cost, privacy, unfamiliarity, regulatory hurdles etc) but a private implementation of the same technology gives them a sandbox to experiment in. The really cool thing about this new system is that it is using public Ethereum token standards like ERC-721 which means the system is instantly compatible with public Ethereum. So, when the time is right, their transition to public Ethereum should be seamless.
Another way to think about it is like this: private Ethereum implementations are intranets and public Ethereum is the internet. A company is able to centrally control the data that flows through their internal network (intranet) but once they expose that data to the internet (public Ethereum), it’s out there for everyone to see and they lose a lot of their control.
I’ll be keeping a close eye on what happens with this project but it certainly seems like large institutions are really starting to ramp up their involvement with Ethereum in a more public way. Two other popular projects are the Baseline Protocol, which aims to help enterprises onboard to public Ethereum, and EY Blockchain who are best known for their Nightfall private transactions protocol (on public Ethereum).
If you want to learn more about all of this, we have a section on EthHub that lists the enterprises currently building on or with Ethereum (it’s definitely incomplete though) and you can also check out the Enterprise Ethereum Alliance website for more general information on how these companies and institutions are using Ethereum.
Have a great weekend everyone!