Blythe Masters, the financial engineer who helped develop the credit-default swap and bring to life a market that peaked at $58 trillion, in notional terms, in 2007, quit JPMorgan and is now promoting something wilder: It's called the blockchain, and it's the digital ledger software code that powers bitcoin.



"You should be taking this technology as seriously as you should have been taking the development of the Internet in the early 1990s," said Masters.



A recent report by Bloomberg provides detailed information about how Masters was introduced to bitcoin and blockchain technology and what Digital Asset Holdings intends to offer.



In March, Masters joined Digital Asset Holdings as CEO. It is a New York tech startup launched by Sunil Hirani, which she says is designing software that will facilitate banks, investors, and other market players to use blockchain technology to change the way they trade loans, bonds, and other assets.



The report said that she plans to offer banks and other financial players both options: Digital Asset is creating an off-the-shelf private blockchain product and developing ways to connect its customers to the existing bitcoin system.



Masters, Hirani, and Donald Wilson (founder of Chicago-based DRW Trading Group) started developing blockchain-based software for three inefficient markets they considered ripe for an overhaul: syndicated loans, U.S. Treasury repos, and equity shares in private companies.



At the same time, Masters recognized that the open structure (no one controls who does the mining) of the bitcoin process would be detrimental to an industry where client confidentiality is paramount. So in July, Hyperledger, a San Francisco software firm that is developing the technological equivalent of gated communities, was acquired by the company. Its system is designed so that users will be able to process transactions themselves instead of depending on the open bitcoin blockchain.



"With private chains, you can have a completely known universe of transaction processors," Masters says. "That appeals to financial institutions that are wary of the bitcoin blockchain."



The inception of peer-to-peer lending, mobile banking and other innovations is causing Wall Street's veterans to rethink their businesses. Masters says the blockchain may be the biggest fintech play of them all.