In light of blockchain’s ongoing emergence and evolution, there continues to be much talk about its myriad applications for both the public and private sectors. New York City-based Symbiont, a FinTech infrastructure company focused on building financial services solutions utilizing distributed ledger and smart contract technology is considered by many to be a major player in this space.
The goal of Symbiont? To foster and develop institutional platforms that simplify and enhance business processes in the insurance, securities and banking industries, as well as in government. Much of the companies early stage work focused on creating a symbiotic alignment between traditional financial markets and new blockchain technology innovation. Today Symbiont is embarking on a major push to broaden its swath of applications and cutting edge solutions for the highly dynamic blockchain marketplace.
The company was formed in early 2015 by Mark Smith, Adam Krellenstein, Evan Wagner, and Robby Dermody. Mark is a serial entrepreneur with a track record of five successful prior FinTech start-ups and was a partner at Lava Trading before it was sold to Citi in 2007. Adam, Evan, and Robby are pioneers in the Bitcoin and Blockchain Space. They founded Counterparty, which was a highly successful “Bitcoin 2.0″ open-source project focused on the digital representation of non-bitcoin assets on the Bitcoin blockchain. Collectively, the founders bring tremendous experience in both disruptive fintech and the emerging field of blockchain technology.
Enter Caitlin Long
Having joined Symbiont as Chairman of the Board and President in August, Caitlin Long is responsible for Symbiont’s commercialization, business strategy and client relationships efforts. A Wall Street veteran of over 22 years, Caitlin had stints at Credit Suisse, Salomon Brothers, Morgan Stanley, she has been an important thought leader in articulating the benefits and blockchain use cases to Fortune 500 executives and regulators.
According to Long, her informal collaboration with the blockchain community began in early 2014 at Morgan Stanley, where she served on the distributed technology working group. Her journey, she says, from Morgan Stanley to Symbiont has been amazing largely because of the wide swath of projects she had engaged with involving startups, consulting firms, and software companies. She also had the chance to intersect with Janet Yellen’s office at the Fed, serve as a UN conference delegate, engage with 50 state insurance commissioners at a workshop, and work with regulators in addressing deep issues with the financial system.
Ultimately, what appealed to her about Symbiont is the quality of their infrastructure design and how it is geared towards financial services. Says Long:
“In my view Symbiont has built the fastest distributed ledger (aka Blockchain) and the most secure and scalable smart contract system currently in existence. It’s extremely fast (80,000 transactions per second in a single region) and can maintain high performance even when under attack by one or more nodes in the network. The ledger can also store large amounts of data, including full legal documentation associated with a particular security of financial agreement.”
Symbiont also stores data in a private and secure way via encrypted, point-to-point communication over the ledger itself, without sacrificing speed. This is considered huge and has a positive impact on contracting parties, operational staff, auditors and regulators in their efforts to efficiently track the details of a business transaction.
When fully advanced, this blockchain-based system could eliminate the need for financial markets intermediaries, thereby mitigating the possibility of human error or fraud. It would be a boon to Wall Street traders in terms of the transactional efficiency of derivatives, bonds, and other asset classes.
Efforts at bridging the gap between blockchain technology and Wall Street is currently in play through its proprietary Smart Securities™ trading platform. This blockchain-centric system allows institutions and investors to issue, manage and trade a range of financial instruments with much greater efficiency than legacy systems allow. Says Long: “Symbiont’s Smart Securities are coded in a mature, well supported programming language (a restricted version of Python 3). Our smart contracts can be upgraded with the version history maintained on ledger.”
Symbiont is also the lead for a developmental project with the State of Delaware. Known as the Delaware Public Archives Project, it provides a record-keeping roadmap for the recording of professional licenses, property deeds, liens and birth, death, and marriage records as well as other government data on Symbiont’s platform. Once the information is gathered, it facilitates a chronological record of workflows and signatures allowing for greater system efficiencies and cost savings.
By allowing a corporate entities to be set up via the blockchain versus through the issuance of traditional stock certificates, the State of Delaware will be ushering in a new age of simpler processes for business owners – from initial corporate formation, to raising capital, M&A, investor communications to shutting down a business. This new model which is anticipated to launch in 2017 is expected to significantly impact private equity, IPO’s, asset-backed and mortgage-backed securities, commercial real estate and other markets.
Says Long: “We view ourselves as the technology ambassadors for the Delaware Blockchain Initiative (DBI). Our efforts are directed toward providing core technology to support the creation of “blockchain shares” which provide the ability to register companies as smart contracts on our distributed ledger. We are also working with the State of Delaware Archives to create “smart records” to help make it easy and cheaper to maintain a wide range of public records. This will help Delaware and other states to comply with their document retention policies in a cost-effective manner.”
Symbiont has also been developing smart contract innovation behind what is known as a catastrophe swap platform that could speed up how quickly victims are paid out in cases of natural disaster. The successful pilot of this technology has created a groundswell of interest among companies in the insurance industry seeking to reduce risk and operational costs.
And in a recent development, the successful completion of a four-way collaboration with Symbiont, Credit Suisse, Ipreo, R3 demonstrating a successful use case for blockchain technology for the syndicated loan market was just announced. The proof of concept process involving a number of banks, service providers and fund managers will however continue through the end of the year.
Security Concerns Ever Present
The biggest concerns for Symbiont clients and key prospects amid this flurry of application advancement clients center around private key management, privacy of information, and hacks or theft of assets. According to Long, these are being addressed in the following manner:
Private Key Management (PKM) – “We partnered with the market leader in PKM, Gemalto to effectively respond to these issues.”
Privacy – “We are employing innovative implementations of cutting edge cryptographic techniques to meet the strict privacy requirement of the securities, banking, and insurance industries. Our Syndicated Loan PoC is live and a successful example of this critical capability.”
Hack/Theft – “Following the DAO hack, we received many questions regarding the relevance of that incident to Symbiont. A similar hack with Symbiont would be impossible for a variety of reasons. Our Principal architect, Pinku Surana wrote a good blog post on the topic.”
“To summarize this last point, we could not be hacked in the same way because:
We are a permissioned network with no mining or cryptocurrency to steal and spend anonymously
Contracts on the Symbiont system can be upgraded, which allows us to quickly address any issues that arise, even after the contract has been published to the network. Unfortunately, in the case of the DAO, the vulnerability was identified several weeks before funds went missing, but the Ethereum protocol provides no mechanism to correct the problem.
Contracts on the Symbiont system are coded in a mature widely used and supported language. By contrast, Ethereum’s programming language (Solidity) is new and insecure. The DAO hack occurred despite close scrutiny of the code by many experts in the field before deployment.”
In terms of what is ahead, Long says that insurance and reinsurance are receiving a great deal of their focus of late with significant progress expected in coming months as Symbiont enters into an number of additional PoCs and pilot projects in the insurance area. “Our growth in the next 12-18 months will likely come from the Synaps syndicated loan platform, the joint venture between Symbiont, Ipreo, et al. that was mentioned earlier. We are quite optimistic about the long-term direction of this.”