When I say establishment, a few examples that could fit are:

  • Financial Institutions. Banks and credit unions.
  • Governments. State and Federal.
  • Regulated exchanges.
  • Media companies.

Now that we’ve got that out of the way, I’d like to share what is an obvious overlap between blockchain based technologies that are recording asset transfers in a open ledger and large established organizations.

I’ve written in the past about when the appropriate time is to use various database types like blockchains but a recent Coindesk article made me feel like I should probably write some more.

While this is all going to be really obvious to a group of people, it’s something that the market seems to be coming around to: the practical applications of blockchains and how to connect them to the rest of the world and in existing business processes.

This entry is very much a stream of thought so if you find an error in this blog please don’t hesitate to let me know and I’ll get it corrected.

I’ve oversimplified a number of the details to make this blog easier to read. I’m well aware of that so please don’t take this is a copy / paste solution. It is not.

My view on this is unique because my experience comes from operating a company that acts as a connection to the establishment. The value we bring is our connection to the establishment and our ability to connect high tech businesses to regulated and established entities.

We provide that connection through easy to use free tools and white label bank transfer APIs. Most companies buy from us rather than directly from a bank because our tools are easy to use and we help get their products into market quickly.

How companies are using the connection we provide has a new twist.

The twist is in the bitcoin->blockchain->ledger discussion and the result is a very sober application of blockchains with a straight forward approach of how to connect those blockchains to existing business processes.

For the sake of argument let’s say a record in a public blockchain looks something like this. It could (would/will) look different but I think this will serve just fine as an example.


If you’re recording a asset owner in an open blockchain based ledger (a database) it’s not really that different than doing it in another database except for the way the data gets recorded.

After an asset is recorded the owner can be updated by simply updating the reference. Something like:


Blockchains are great because they are immutable by nature and the previous record always persists. For historical record keeping purposes this is helpful.

In the new entry above, in theory, we just created a new owner and recorded that this AssetID is now owned by Owner2. It’s also been made available publicly and solved one problem but we now have two new problems:

  1. How do we know Owner2 paid for that asset?
  2. How do we prove Owner1 got paid for that asset?

Which is where the overlap comes into play. It’s not magical, it’s practical.

While the systems used to make what I describe below happen may appear to be disparate systems, they are much more powerful when they work together.

When we tie the asset exchange to the payment we teach these two systems to talk and something very beneficial occurs.

Yes, a company can build standalone systems that record new assets all day or record them differently but they remain in silos that can’t be leveraged unless they interact well with the establishment.

The solution isn’t really complex. If that second record shows:


Where SettlementID refers to a final transaction that shows Owner1 was paid by Owner2 and references another system that moved actual money from Owner2’s bank account to Owner1’s bank account. Alternatively, you could insert an intermediary, a broker for example, and the same underlying functionality still would apply.

Simply put, there needs to be a process for exchanging cash and similar assets held at banks through those banks in a way where ownership change is tracked for existing assets.

SettlementID could just as easily be swapped for ClearingID until the transaction is completed in which case you could make another entry that references the order.


All of a sudden you’ve got a pretty damn good asset tracking system that is tied to the actual payment.

The AssetID type doesn’t really matter. It could be:

I don’t know where the UPC of my phone’s UDID originates or who technically owned it before me but it could be helpful knowing that trace if I wanted to prove ownership of my device.

Those assets (UPC/UDID/Etc), are almost always in third party systems. Switching those third party systems over to a new database type has more to do with changing the system of record than it does creating different assets.

A third party system could be:

  • Another blockchain recording another asset transfer that corresponds.
  • A private database somewhere.
  • A financial institution.

The references to the clearing or settlement in separate blockchains or ledgers ties it all together and makes it more powerful in certain applications.

In theory at least, if you built a system this way you’d always be able to look at the newest entries for the asset and immediately track the ownership trail. While this blog visually presents each entry one on top of the other, it’s more likely that each entry will be separated by hundreds, if not thousands, if not hundreds of thousands of other entries. Depending on the blockchain or how often the asset is exchanged it’s logical to assume there would be much more dramatic separation.

Where Dwolla’s role has been is on the financial institution side providing the ClearingID and SettlementID equivalent portion for dollar transfers.

We enable customers, mainly those using white label services, an easy access point to the US banking system that ties the actual US Dollar currency payment for the asset to the record of the asset being bought or sold.

We act as the provider of the ClearingID and SettlementID with the associated compliance and security to companies building blockchain based asset transfer systems.

These businesses, like the ones we’ve been serving for years, just have a need to get money easily from one bank account to the other and record that the transfer happened.

The ledgers, the blockchains, the databases, are complimentary and it’s all just collapsing into one glorious and interconnected layer of the internet.

I specifically didn’t use this as a currency exchange example and that was intentional. That’s a horse of another color.