Several major companies from across both the technology and financial industries—including IBM, Intel, and Cisco as well as the London Stock Exchange Group and big-name banks JP Morgan, Wells Fargo, and State Street—have joined forces to create an alternative to the blockchain, the global online ledger that underpins the bitcoin digital currency.

Overseen by the not-for-profit Linux Foundation, this open source project aims to build blockchain-like technology that can bring a new level of automation and transparency to a wide range of services in the business world, including stock exchanges and other financial markets.

These companies are creating a new distributed ledger—rather than embracing the blockchain itself.

"The current blockchain is a great design pattern," says Jerry Cuomo, vice president and chief technology officer of IBM's software group. "Now, how do we make that real for business? What are the key attributes needed to make that happen? That's what this organization is about."

Dubbed the Open Ledger Project, this effort is a re-imagining of several big ideas. The blockchain is essentially a database that runs across a worldwide network of independent machines—a database that's controlled by no single entity but can still reliably track the exchange of assets, thanks to some nifty mathematics. With bitcoin, the blockchain tracks the exchange of money. But it can also track the exchange of anything else that carries value—including stocks, bonds, and other financial securities, as well as assets like houses and car titles. And in recent months, several projects have seized on many of these possibilities.

Nasdaq OMX—the company behind the Nasdaq stock exchange—is using the blockchain to oversee the exchange of private stock, while online retailer Overstock—through a subsidiary called TØ—has built a system that will allow businesses to issue and even borrow securities via the blockchain. Just last week, the Securities and Exchange Commission approved Overstock's blockchain stock plan.

IBM and a startup called Digital Asset Holdings, or DAH, led by former JP Morgan exec Blythe Masters, have been exploring similar technology, and both are now part of the rather large group that has agreed to participate in the Open Ledger Project. Other participants include tech companies Fujitsu and VMware; Japanese financial outfit Mitsubishi UFJ Financial Group; and SWIFT, a company that builds technology for securely driving financial applications. IBM apparently led the creation of this group effort. Earlier in the year, the tech giant said it would open source the code for its bitcoin project, and this code will provide part of the foundation for the Open Ledger Project.

Their Own Blockchain

The promise of blockchain technology is that it can provide a more secure, more reliable, more transparent, and more automatic way of exchanging money, securities, and other assets. It lets you trade assets as easily as you trade emails today—and you can trade them without putting your trust in any one person or organization. This could eliminate many of the slower technologies and expensive middlemen that clog up today's markets, says Marley Gray, who oversees blockchain work at Microsoft. People like Gray and Overstock CEO Patrick Byrne believe the blockchain can also close loopholes in the market that allow traders to game the current system on Wall Street. All this could potentially apply to the Open Ledger Project. Cuomo says its technology could streamline the exchange of car titles, track supply chains, and oversee vast amounts of data from environmental censors.

In backing a new project, they can exert more control over how it's built and how it is used.

It's notable, however, that IBM and its cohorts ar creating a new distributed ledger—rather than embracing the blockchain itself. In backing a new project, they can exert more control over how it's built and how it is used. Like the Open Ledger Project, the bitcoin blockchain is open source, meaning the code is freely available to the world at large and anyone can potentially contribute to the project. But in creating a new open source effort, giants like IBM can put themselves at the center of things. Open source is about giving stuff away. But there's sometimes a self-interest driving the magnanimity. One open source project can battle another or refine its ideas or take those ideas in new directions.

Indeed, some companies involved in the project may feel threatened by existing efforts to reinvent the financial markets with the blockchain. State Street bank, for instance, stands to lose if companies start using Overstock's technology to borrow stock. In the US, the stock loan business is a $954 billion market; State Street, known as an agent lender, is a big part of that. Its future depends on getting ahead of the game.

Keeping the Blockchain Open

All that said, IBM and its collaborators are not building a proprietary blockchain. And no one company is trying to run the project. A large group of companies has set up the project at the Linux Foundation, which has long overseen the Linux open source operating system. The foundation is widely respected in the tech world as an organization that knows how to run truly open projects—projects where many participants have a say.

At this point, only IBM and DAH have vowed to contribute existing code (DAH has also contributed the name "Hyperledger," which could be used to brand the effort in the future). But Jim Zemlin, who heads the Linux Foundation, reiterates that this project is fundamentally designed for widespread collaboration. "We have a lot of confidence in this process," he says.

IBM's Cuomo says there's plenty of room to use this code to create something that is like the blockchain but separate. "We are very excited about blockchain, less as a once-and-only-once implementation of an idea, but as an idea that can be implemented and extended in ways that are consistent but enhanced," he says. It's unclear how, specifically, these companies hope to enhance the idea. But Cuomo believes that the project may also end up dovetailing with other distributed ledgers.

"Like with the web, there is no one thing to rule them all," he says. "There is no one blockchain to rule them all. There will be multiple implementations of the blockchain. And it will be a sin if they don't interoperate and work together."

More Than One Party

It's important not only that the Open Ledger Project is open source, but also that this group aims to create a ledger that's distributed—a ledger that spans machines controlled not by one organization but many organizations. For Microsoft's Gray, this is what makes the blockchain so powerful, and why it could be so useful in the world of financial trading. "A blockchain is basically worthless within a single work organization. There is no reason to have this trustless environment within your own corporation," Gray says. "You have to have parties that are not yourself."

Certainly, IBM isn't the first to take this kind of approach. Others, including Ripple, have created alternative blockchains in the past as a way of taking the idea in new directions. Many believe that multiple blockchains can actually enhance the distributed nature of the idea. Though these projects are separate, Ripple is already leading an effort to create a central protocol that would allow for communication between multiple ledgers.

In a way, the Open Ledger Project competes with the existing blockchain—and existing blockchain-based technologies like the system built by Patrick Byrne and Overstock. But in other ways, it doesn't. Judging from what IBM and others have said about the project, Byrne applauds its arrival. He's been worried that the big Wall Street banks would "circle the wagons," creating tech that locks everyone else out. But because IBM's new project is open source—because anyone can use it and contribute to it—he's pleased. He believes in more than a single technology. He believes in a big idea. "I'm not wed to bitcoin's blockchain," he says. "I'm blockchain agnostic."