Eight financial firms have completed a successful test of a smart contract prototype built by blockchain startup Axoni.

Announced today, participating institutions include five banks (JP Morgan, Credit Suisse, Barclays, Citi and one undisclosed participant), two financial infrastructure firms (Markit and Thomson Reuters) and business consultancy Capco.

The months-long equity swaps processing tests were organized by Axoni to show that the New York firm's software is capable of handling complex post-trade services such as margin payments and corporate action processing. Further, the project was designed to automate the time-consuming lifecycle management and synchronization tasks behind single stock, index and portfolio swaps.

To conduct the OTC equity swaps tests, Thomson Reuters first integrated its ethereum-based BlockOne hosted wallet with Axoni's software. The integration provided the group valuations and market data such as equity prices and LIBOR rates.

Smart contracts were then generated using information analysis firm IHS Markit's MarkitSERV processing platform, giving the banks a "synchronized, golden record" of transactions, a statement said.

To supplement the expertise of each of the project members, Axoni asked that Capco review each work-flow from beginning to end to ensure there were no redundancies.

Capco's managing principal and blockchain lead Benjamin Jessel told CoinDesk:

"We’re using smart contracts in a far more sophisticated way than what has been done in the past."

In total, 133 structured test cases assessed the capabilities of blockchain technology equity derivatives with a 100% success rate, according to the statement.

In addition to testing the functionality of the smart contracts, the working group conducted 50 tests of the underlying Axoni Core infrastructure.

Image credit: Drop of Light / Shutterstock.com

Disclosure: CoinDesk is a subsidiary of Digital Currency Group, which is an investor in TradeBlock, the parent firm of Axoni.

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The code for a long-in-development bitcoin scaling solution could be ready for activation as soon as 15th November.

The new software – version 0.13.1 – will include more code for Segregated Witness (SegWit), enabling users (and, perhaps most notably, miners) to begin the upgrade process. The launch will kick off a process by which the extended stakeholders in the distributed network will be asked to signal whether they support SegWit.

The news comes from an update on a mailing list for developers working on bitcoin's primary software, Bitcoin Core. There, developer Pieter Wuille posted new details this weekend about the planned rollout of SegWit. A release candidate for 0.13.1 has since been published.

The pending launch follows months of testing by developers. SegWit's code, for example, was first released for testing over the summer, but the new version would bring that code into production.

The November release date doesn't mean bitcoin's capacity issues will be instantly resolved, however.

For example, SegWit won't become the law of the land, so to speak, until 95% of the world's bitcoin miners signal their support by running the upgraded version. Furthermore, 2,016 transaction blocks need to pass after that threshold is reached before the network begins enforcing the change.

While promising, the release could spark further debate within the bitcoin community about the ways in which the bitcoin network can be scaled to support more usage given that tensions have recently been heightened over a perceived lack of progress on the issue.

Other software implementations, including Bitcoin Unlimited and Bitcoin Classic, have been put forward as alternatives to the Core approach, advocating for on-chain scaling that would expand the size of transaction blocks on the bitcoin network.

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Bitcoin CoreBitcoin UnlimitedSegWit

Digital Federal Credit Union (DCU) has joined the Chamber of Digital Commerce, the Washington, DC-based blockchain trade organization.

DCU claims to be the largest credit union in the New England region by total assets. Founded in the late 1970s, it boasts more than 500k members throughout the US. The Massachusetts-based credit union is the first of its kind to join the organization, which was established in 2014 and aims to shape policy around blockchain in the US capital.

In statements, DCU president and CEO Jim Regan echoed others in the credit union space, saying:

"We believe distributed ledger technology has the potential to make a positive impact for credit unions and their members."

The credit union’s entry into the trade organization isn’t its first foray into the technology. DCU operates a fintech innovation center out of Boston, and in the past has said it wants to attract blockchain developers to take part in the initiative.

The industry as a whole has been exploring potential applications of the technology. More than 50 credit unions have been working together on the CU Ledger project, which aims to develop new products and services in areas such as digital identity.

Beyond blockchain, DCU has sought to position itself as an early technology adopter in the past. The credit union was one of the earliest institutions of its kind to launch a Web-based portal for banking services.

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Chamber of Digital CommerceDCUWashington DC

Nothing to see here...

That's the message from developers, entrepreneurs and analysts ahead of an upgrade to the ethereum network that aims to solve "urgent network health issues".

The new code, expected to be released tomorrow morning, follows a series of attacks that developers say exposed issues with the pricing model the network uses to discourage transaction spam. As a result, the ethereum community is set to adopt a patch for the issue at block 2,463,000 on its main blockchain, a move developers believe will reprice network functions to better incentivize intended use.

A second hard fork is then expected to remove the spam that resulted from the attacks, though details on this update are still forthcoming. (A full FAQ has been posted by the Ethereum Foundation here).

But while expected in light of recent issues, the changes are the subject of heightened interest given the fallout surrounding a problematic hard fork this summer. Prompted by an attack on a prominent application, the community elected to restore investor funds through a protocol change that invalidated the alleged theft.

What followed, however, was a prolonged – and still active – disagreement that saw that a group of developers continue to write code for and process transactions on the abandoned blockchain. Dubbed ethereum classic, the alternative network is continuing to attract developers and trader interest.

But despite this backdrop, analysts don't see tomorrow's hard fork as one that will yield similar results given that it will improve the experience for users.

Developer Demian Brenner, an entrepreneur building a smart contract platform called Zeppelin on ethereum, said there was broad agreement among his users that this fork would be a non-event.

Brenner told CoinDesk:

"'Forking' is presented as a super scary concept, but in any other field it would just be called 'upgrading'. Contentious hard forks ... are legitimately troubling, but non-contentious forks are a good thing, they're how the platform is built and improved."

So far, analysts said that key portions of the ethereum ecosystem have already signaled support.

As for the upgrading process, Jonathan Toomim, who runs a hosted mining operation that serves ethereum miners, said he had already upgraded his machines to clients that are ready to switch over to the new code when it is deployed.

Customers of the major ethereum exchange Poloniex were similarly advised that the startup would quickly adopt the new blockchain to ensure its services aren’t interrupted.

Attacker risk

At issue, the non-profit leading ethereum's development said, is an economic imbalance that tomorrow's fork will resolve.

"The attacker performed a DoS attack by repeatedly calling certain operation codes (opcodes) in their smart contracts that are computationally difficult for clients to process, but very cheap to add to the network," a blog post on the fork reads.

But while the fork will solve for one proven method of attack, analysts are unsure of whether this fix will solve for another problem – the resolve of the attacker or attackers seeking to disrupt the network.

As detailed previously in CoinDesk, the attacks coincided with the start of a major ethereum developer conference and were seen by many as a willful attempt to express disdain over the July hard fork.

To this point, observers aren't exactly sure the fix will stop the attacker.

"The bigger risk is that the mysterious attacker has something more damaging up his or her sleeve, like actually robbing contracts rather than just this childish [spam attack]," digital currency hedge fund operator Jacob Eliosoff told CoinDesk.

Still, not everyone saw this as an issue.

Other market participants were quick to caution that the ethereum platform remains in its early stages, and that, despite expectations, it is still months and years away from being "production ready".

According to Toomim, it's better for the attacks to continue on the basis that any new issues could be identified and resolved.

"I would rather it be production ready than seem production ready," he said. "If there are bugs or flaws, I would prefer that they be revealed before a lot of dapps are deployed."

Changing costs

In other areas, analysts indicated that they found little potential risk in the fork.

For example, even though the change will increase the costs of some network functions, Brener said Zeppelin's community doesn't expect smart contract development to be impacted.

“The hard fork mainly changes gas costs of certain operations, so developers will need to be careful when using those. We haven't seen any big changes in development style yet but time will tell," he said.

Dominik Zynis, a marketing advisor at Waves, a decentralized ethereum platform for the creation of DAOs, said his platform had already shifted its focus to bitcoin smart contracts following the last hard fork.

"We do plan to support ethereum and ethereum classic, and are indeed pleased to see this hard fork tis addressing security issues," he said.

Still, Zynis's comments pointed to the broader optimism that the hard fork would proceed without issue, mitigating the chance that further competing blockchains would fragment the developer ecosystem.

He concluded:

"As long as hard forks do not produce more competing blockchains, this is a non-event for us."

Disclaimer: CoinDesk is a subsidiary of Digital Currency Group, which has an ownership stake in Smart Contract Solutions, the parent company behind the Zeppelin project.

'Odd man out' image via Shutterstock

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Two banks in India have reportedly partnered on a series of blockchain trials aimed at testing the waters for potential new services.

Axis Bank and Kotak Mahindra Bank are working on early concepts related to cross-border payments and transaction settlement, according to Indian news portal LiveMint.

The news closely follows that of ICICI, another Indian banking institution, is working with Dubai-based Emirates NBD on similar initiatives. Combined, the two partnerships signal strong interest among India’s banking sector in applications that focus on the movement and settlement of funds. Further, it’s the kind of experimentation that the Indian central bank has pushed for in recent months.

According to LiveMint, representatives from both Axis and Kotak Mahindra struck cautious yet optimistic tones in describing the trajectory of their trials.

Deepak Sharma, chief digital officer for Kotak Mahindra, was quoted as saying:

“We are theoretically convinced that blockchain is the way ahead. But we have to establish a practical use of the technology. As of now, the focus is on whether the technology is scalable in the near future.”

Though unnamed, the two banks are said to be working with internationally as well as a “technology provider”.

Amit Sethi, president and chief information officer for Axis, told the publication that he believed the bank’s retail and corporate business lines might see the first commercial-scale applications. Further, he indicated that the bank would look to begin offering related products to its clients, but demurred on when any rollouts might take place.

“We will come out with solutions for our customers soon, but we don’t want to commit to any time frame,” he said.

A representative for Axis was not immediately available for comment. Kotak Mahindra did not immediately respond to a request for comment.

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Axis BankIndiaKotak Mahindra

South Korea’s largest credit card company is set to use a blockchain identity solution developed by local bitcoin startup Coinplug.

The service will be based on what Coinplug calls FidoChain, a “private blockchain technology” aimed at providing a distributed means of verifying and maintaining digital identities. KB Koomkin Card, a subsidiary of KB Koomkin Bank, plans to complete its integration by the end of this year.

The startup has been working in the area of digital identity for some time, netting a $45,000 prize last year after submitting a prototype system based on the concept to a competition held by JB Financial Group.

It’s a use case that has been pursued by established enterprises as well as new companies working in the blockchain space. Now, following additional development, Coinplug is pushing ahead with what it calls the “Coinplug Identification System”, or CIS.

According to Richard Yun, director and chief operation officer from Coinplug, KB Koomkin wants to integrate the tool into its credit card onboarding services.

He told CoinDesk:

“KB will use this for commercial purposes and the availability of this service will be [for] all customers of the KB Card around mid-December.”

In addition to its enterprise blockchain projects, Coinplug operates a bitcoin exchange service. The tech, launched last month, comes just under a year after Coinplug raised $5m in a Series B funding round. The startup has raised more than $8m to date.

Using FidoChain, the identity solution allows users – in this case, KB Koomkin Card – the ability to add, verify or revoke identities tied to a credit card product.

Yun said the startup wanted to potentially resolve security and user experience problems associated with existing identity solutions in South Korea.

“We thought it is very important to provide secure and easy to use identification and authentication service to banking service users, and we believed that private blockchain technology can be very effective to implement secure and scalable identification/authentication service.”

It’s a prospect that, according to Yun, has attracted significant interest from KB Koomkin. The company, which reported $2.6b in operating profit for 2015, is said to be looking at applying the tech to both services it offers now as well as new ones in the future.

“They [are considering whether to] expand the coverage of CIS to other existing and new services,” Yun explained.

KB did not immediately respond to a request for comment.

Image via Shutterstock

CoinplugKB Koomkin CardSouth Korea