Digital Asset Holdings has revealed new blockchain technology it believes could one day connect the world's most important financial institutions.

Instead of a single "full stack" of its own applications, languages and execution capabilities, the company (headed by former JP Morgan executive Blythe Masters) is going for a more modular approach with its new Global Synchronization Log (GSL), revealed for the first time late last week.

Intended to serve as a foundation for independent distributed ledger implementations, GSL also aims to help other blockchain products focus on improving their smart contract services.

Digital Asset Holdings CTO Shaul Kfir went so far as to say the startup's goal is industry-wide standardization.

Kfir told CoinDesk:

Presented for the first time at a meeting of the Hyperledger open-source blockchain consortium, the white paper details how popular enterprise blockchain frameworks including Hyperledger's Fabric, R3CEV's Corda and CoinScience's MultiChain could each interface with the distributed log.

The benefits from such a "wider collaboration," the paper argues, include more robust metrics about transactions and allowing other blockchains to focus on improving the quality of their own throughput and version management.

From the paper:

Presented in detail by Digital Asset's chief ledger architect, Tamas Blummer, the paper positions the GSL as aligned with Hyperledger's stated objective of becoming an "umbrella" organization that connects corporations.

To help ensure that happens, GSL was developed in response to demands Digital Asset encountered in its work with highly regulated global financial infrastructure providers, according to the paper. (That includes the Australian Securities Exchange (ASX), which has invested at least $17m of Digital Asset's $60m raised to date).

The New York-based company identified five existing methods it said are currently being used elsewhere to protect user privacy. The first two of which — obfuscation and encryption, the paper argues, don't provide enough privacy for customers.

During the presentation, Blummer compared these two methods to those provided by the bitcoin blockchain, Hyperledger's Fabric and the new blockchain project, Zcash, the best-known blockchain to implement zero knowledge proofs.

While touted as a step forward in blockchain privacy, the Digital Asset team concluded Zcash's technology had not been tested enough in real-world applications. (The blockchain project officially went live last week).

With the remaining options left, the GSL combines segregated ledgers and data execution commitments.

The former, the paper defines as an interconnected network using "common protocols or trusted intermediaries" to move data from one place to another. The latter, being a "network wide blockchain" that "carries fingerprints of sensitive data" while the actual data is broken off and transmitted over private channels.

The first function of the GSL is to ensure that "mutually exclusive events" are in fact unique. Or to put it another way, to ensure that smart contracts only exist in one place and that if an older contract is referenced by a newer contract, only the new one survives.

Notably, the paper does away with the term "smart contract" altogether, opting instead for the more traditional term "contract."

But in addition to ensuring duplicate contracts don't exist, the service works as a messaging system to inform all parties affected by a contract — perhaps thousands of them — that something has happened on the blockchain that they should know about.

To do this, the contract is processed off-chain. This could include processing ranging from flows of transactional data to common models of workflow behavior. While these contracts are designed to be code-enforced agreements which participants must follow they are not, for that matter, intended to be legally binding, according to the paper.

In fact, these contracts, taken together as a single collective state are how the paper defines the blockchain itself.

So long as these contracts remain capable of executing a command they will remain a part of the blockchain. But as soon as a new contract references the old one, it "replaces or consumes" the predecessor.

This process of replacing is similar to the contract version of ensuring there isn't a double-spend. Importantly, in light of the problems that led to the downfall of The DAO (which was unable to turn off its own self-executing smart contracts), unreferenced agreements can also be manually archived to make them inactive.

A transaction on the GSL results in a modification to the state by either activating or archiving a related smart contract.

To increase the sense of security, Digital Asset designed the GSL to make these modifications without having to "understand or make transparent" the content of the third-party’s message.

The end result of this separation could be an increased willingness of other potentially competing projects to integrate — if the benefits of doing so end up paying off.

From the paper:

One possible risk to Digital Asset's method is that transactions that occur on the GSL could be associated with events in the open market. The resulting correlation would amount to data leakage that could be captured by competitors or other observers.

To address this potentiality Digital Asset breaks down each of its transactions into two parts.

The first part is a Merkelized hash of the events with an accompanying notification sent to all parties impacted by the state change of a contract. "Crucially, this shared secret cannot be understood by any other party," according to the paper.

These messages are designed to be easy to store, easy to recognize and cheap. That the transactions are light and affordable is considered essential for their final purpose, which according to the paper is to efficiently inform the thousands of potential parties that could be impacted by a change in a contract multiplied "billions" of potential contracts.

The second part of the transaction is opened specifically to auditors so they can check to ensure that contracts are only referred to once. This access, however, only gives them the ability to see the contract details they might need to do their job.

In addition to sending messages to every party that agreed to the terms of a contract, the GSL software helps validate that the stream of information is updated and accurate.

To do this, Digital Asset allows networks running on the log to restrict which parties in a community of users can do which tasks. But, in order to ensure the overall network remains accurate, all parties involved have the ability to verify the transactions once they are made.

"Thus, each participant behaves as a real-time auditor to the validity of commitments to the ledger as they pertain to the subset of the ledger visible to them," according to the paper.

In addition to the participants doubling as auditors in a similar way as happens in the bitcoin blockchain, regulators are also given special access.

Specifically, different types of regulators can be granted particular forms of access.

These forms might include a "notification auditor" who could insure all affected participants have been notified of a change to their contract and an auditor specifically empowered to make sure the current state of the blockchain directly follows from the previous state.

Digital Asset said it intetended for the white paper to now elicit feedback on the proposal from Hyperledger's members, with the meeting serving as a first step in the process.

Perhaps due to the fact the paper was provided shortly before the meeting, there was initial confusion as to the intent of the technology among participants, with one member questioning whether it was a competitor to R3's Corda.

Based on their current work and that feedback the company said it plans to release a series of other papers elaborating in greater technical detail exactly how the technology will work.

More importantly perhaps, the future papers will explain how the technology might be integrated — or not integrated — by the other Hyperledger members.

Kfir told CoinDesk:

New York image via Shutterstock