South Africa’s central bank, its central securities depository (CSD) and several of its largest banks came together yesterday to chart a course toward large-scale blockchain implementation.

Held in Johannesburg, South Africa, the meeting saw members of the blockchain working group elect a chairman, secretariat and set strategic objectives for the year ahead. Collectively, the participants in the working group comprise nearly every participant necessary to build and implement real blockchain products.

Yet, even more remarkable is the outlook of some of the participants.

Monica Singer, CEO of Strate, South Africa’s CSD, for example, described the group’s effort on blockchain as one that isn’t just about finding a new revenue streams – but evolving to survive.

As more and more services move to distributed, shared ledgers, she believes central authorities like her own will have no choice but to meet with their users and explore new possibilities.

Singer told CoinDesk:

“My mission is to ensure that Strate can continue operating forever. But it will have to change its role. It’s like, if you’re a taxi operator you better embrace Uber because I don’t know how long you’re going to operate as a taxi.”

Hosted by Strate’s experimental financial technology division, Fractal, the working group was jointly created by the CSD and the country’s ‘Big Four’ banks: FirstRand Group, Standard Bank, Absa/Barclays Africa and Nedbank.

Sitting in as observers to the working group are the South African Reserve Bank and the Financial Services Board, both of which help regulate the nation’s post-trade services.

Overall, South Africa’s Blockchain Working Group is broken down into three other ‘streams’, also including education, use-case development and technical construction.

“At the end of the day, the blockchain is about consensus,” Singer said. “So you have to work with everybody. So that’s what we did.”

Vetting use cases

To help identify the future role Strate might play, the CSD – which conducts on average 350,000 trades per day – is now collaborating with other working group members to determine a course forward on blockchain.

In addition to helping formally elect leadership to the group, the chairman of its technical ‘stream’, Strate innovation architect Johan Pretorius, broke down the the project’s current work and future plans.

Pretorius started work on the project last year by co-developing a proof-of-concept using the ethereum blockchain to build a faster, more transparent way to issue syndicated loans.

Now, Pretorius has segmented the technical stream into four teams working with Chain, Hyperledger, Corda and the soon-to-be launched Enterprise Ethereum.

Upon completion, Pretorius plans for the team to build a common user interface through which projects will be accessed, gauged via standardized tests and stored in a repository that will be “selectively visible to the external world”.

To further assist in the identification of use cases, Pretorius said additional high-tech vetting tools could be implemented using other Strate services.

He told CoinDesk:

“We might employ our artificial intelligence technologies to create a blockchain advisory service that will assist the community to assess whether or not a use case is suited for a blockchain solution and if so, which tech is most suitable.”

Chocolate and other assets

One reason for the rapid rate of progress of South Africa’s financial institutions is its size – not too small to reach critical mass, not too big to get organized – according to another member of the blockchain working group.

The head of Rand Merchant Bank’s blockchain initiative, Farzam Ehsani, told CoinDesk that, with only six major banks in South Africa, consensus is easier to achieve.

As part of that orderly transition to blockchain, Ehsani, who was yesterday elected chair of the working group, said the group is formalizing who is responsible for what, and what happens if things go wrong.

Already, Rand has developed an ethereum-powered prototype for selling employees chocolate and other snacks at its ‘tuck shop’, a small convenience store.

But with the “the unity in the room” at the working group meetings, Ehsani suggested the chocolates could be easily substituted for other assets, with the tuck shop equating to the central bank.

“If you actually take this tuck shop away,” said Ehsani, “and don’t think about it as a tuck shop, think about it as an issuing institution, the chocolates now are no longer chocolates, but they’re bonds, equities, they’re whatever you want them to be – they’re assets.”

‘Magic’ technology

While faster transactions times are certainly important to Singer, who in 1998 helped implement Strate’s post-trade services, the immutable, transparent services of a distributed ledger appeal to her for another reason.

In addition to acknowledging that Strate – the “mother of all intermediaries” as she called the company – will have to evolve to survive, she says she’d be happy to disintermediate another notable service as well.

From the time she helped launch the company almost 20 years ago, Singer said she wanted to bring South Africa faster transaction times without Swift, the inter-bank payments network also experimenting with blockchain and distributed ledgers.

“But I was told that I couldn’t use anything but Swift because the Internet was not reliable,” she said.

Singer went on:

“Now, I’ve learned, that this incredible magician, Satoshi Nakamoto, got really upset with the financial crisis, like I did, and invented a method that said we don’t need intermediaries, because the intermediaries didn’t deliver the certainty that we need for financial markets, because look at the mess that we’re in.”

Building revenue

But as Strate and other intermediaries like the DTCC in the US work to better understand what future services they might be able to provide, Singer said finding new ways to generate revenue will be crucial.

For Strate, that means further development of its ethereum-based proxy-voting tool, developed last year.

Similar to the work being done by financial services firm Broadridge (which last year invested an industry-leading $95m to make it easier to make corporate voting decisions), Strate wants to make it easier to vote transparently, anywhere.

Already, Strate has gained interest in the idea. In August, the firm signed a letter of intent with Russia’s National Settlement Depository to help develop the offering.

While Strate has yet to work out revenue forecasts for the service, Singer thinks blockchain-based proxy-voting might eventually help off-set losses resulting from her company’s changing role as middleman – or middle woman, as the case may be.

Not only might the increased transparency make it more difficult to let others vote in one’s place, it could help make voting more mobile – a particularly valuable service in some circumstances.

Singer concluded:

“What we’re doing is we’re taking the proof-of-concept that we have, which is amazing, you can do it with your phone, you can even vote when you’re sitting on the toilet, because it doesn’t matter, you don’t have to attend the meeting.”

South Africa image via Shutterstock