It’s awkward when you set up a business around a technology that you reckon is going to disrupt global finance so you name your business after said technology, send your CEO on speaking tours to evangelise about said technology, but then decide that said technology isn’t going to do anything useful for you, isn’t it?
Digital Asset was one of the pioneers of blockchain-in-finance, with the idea that it could make clearing and trade settlement sexy again (well OK maybe not but at least make it faster and more efficient). Its erstwhile CEO Blythe Masters, a glamorous former JP Executive who was credited with/blamed for pioneering credit-default swaps, trotted around the globe telling people that blockchain was “email for money”.
So significant a role did DA play in the early blockchain mythos that artist Simon Denny immortalised Masters and the firm in a special edition of the board game Risk, as part of a 2016 art exhibition in New York.
And even though Masters stepped down as CEO a year ago, Digital Asset is still seen as a big player — crypto news site Coindesk last week called the firm a “seminal enterprise blockchain startup”. But one might have thought if the company was so seminal, it might still be actively involved in blockchain.
Not so much.
As Izzy and the FT’s Phil Stafford wrote back in the summer, the firm has been steadily shifting away from the distributed technicolour dream-ledger that is blockchain, and towards DAML, its programming language for creating smart contracts (i.e. contracts that self-execute when certain pre-determined criteria are met).
But until now, the idea seemed to be that the smart contracts would run on top of some sort of a blockchain platform. As DAML is just a programming language, and therefore cannot be used on its own, the idea would be that you would use it to run your own DAML-based applications, on a blockchain or distributed ledger-based system (the difference between the two is slightly unclear but the latter is kind of just a watered-down version of the former).
Last week, Digital Asset announced that it had raised another $35m in a Series C fundraising round. The money would be used, it said, to “accelerate the adoption of DAML across multiple industries, expand the number and variety of DAML-enabled partner products and fund new products designed to enhance the DAML developer experience, specifically project:DABL, a cloud-based prototyping and production environment for DAML applications”.
Despite calling itself a “the NY-based blockchain start-up” in the press release, there wasn’t very much else (i.e. nothing) in it about blockchain, or even distributed ledger technology (DLT), except in reference to some other companies that do blockchainy things.
So we asked Digital Asset to confirm whether DAML needed to be used with a blockchain or DLT platform, and they told us (emphasis ours):
DAML is a smart contract language that is designed to work with blockchain platforms. DAML cannot be used on its own – it needs a platform underneath it.
What’s unique about DAML, however, is that we’re enabling it to work on more than just blockchain platforms. For example, we announced in June that we will enable DAML for Amazon’s cloud-based Aurora database. Our vision is for developers to use DAML to build applications that can run on blockchains or traditional databases. The point is that (eventually) DAML-based applications should be able to run on any kind of database.
Did you catch that? What is unique about this “blockchain start-up” is that although it is designed to work with blockchain platforms, it can actually work with any old database. (Also is it just us or is this a tacit admission that blockchain is, after all, just a kind of database?)
So how did DA manage to raise another $35m from new and existing investors (who include Goldman Sachs and JP Morgan)? Could it be what one Alphaville friend likes to call the “Embarrassment Phase” of the technology hype cycle (ie, the bit where investors have to keep ploughing money into a project that they’ve already put money into, so as to save face in front of their own investors)?
One thing seems clear: if Digital Asset is really a seminal blockchain company, then it’s likely that many other blockchain companies will stop being blockchain companies in the near future.
Digital Asset Holdings’ pivot raises doubt over blockchain future – FT
More trouble in blockchain-land – FT Alphaville