One of the core philosophy behind the introduction of the blockchain technology is its resilient nature to any change of data on the blocks. However, in regards to real world application, this becomes a huge roadblock towards implementing the technology across various applications, as they need to be flexible. Consequently, CME Group has been working to develop a flexible blockchain technology.
According to a recent filing by the US Patent and Trademark Office last week, CME Group is developing a blockchain-based system that will allow modifications of the blockchain protocol without requiring consensus from all the network participants. CME Group had originally submitted the patent filing back in December 2017.
In the patent filing, the authors cited the example of airline frequent flyer program, where the new blockchain-based system can be utilized. For example, if an airline needs to increase transaction fees for transferring frequent flyer miles or have to add a KYC identity program, in a conventional blockchain, it would need every node in the network to approve the change. If for any reason, a majority of the nodes do not approve the change, it will result in a split of the network, which is not desirable.
How to Trade In a Volatile MarketGo to article >>
The application explains: “One example of a rule change is if the airline wants to increase transaction fees to transfer airline miles between parties. If the airline uses an open blockchain protocol like Bitcoin, where anyone may act as a node or miner, the increase in transaction fees would have to be approved by the blockchain users. The rule change would require virtually every node and miner to update their software before the rule change could take effect. Otherwise, a fork … may occur.”
With the new blockchain platform, CME Group proposes a “method for synchronizing rule changes in a system, which implements a blockchain for transactions.” When a node determines a data imposing new rules on the network, it will validate the data and generate a transaction on a new block containing the information about the change to the network’s operational rules. This data will then be communicated to all the nodes in the network.
CME Group is one of the more established financial players that has embraced blockchain technology. Unlike a majority of other financial institutions, CME Group has embraced Bitcoin, culminating in the launch of futures instruments based on the digital asset last year, which have since turned out to be a major success.