Taariq Lewis, the CEO of blockchain startup, Aquila Services, Inc., and Promise Software, reportedly sent a note to Coindesk that said he received a whitepaper describing what “appears to be a replacement for the entire ACH system of banking.”

In his message to the news outlet, Lewis noted that the message had been sent “anonymously”, and that it looked “interesting.”

Putting The $47 Trillion Clearing House On A Blockchain

The US Automated Clearing House (ACH) is an electronic network designed to function as a clearing house for financial institutions. The ACH usually handles “domestic low value payments”, but it may also “facilitate the exchange of payments, securities, or derivatives transactions … between two clearing firms.”

The main purpose of the ACH is “to reduce the risk of a member firm failing to honor its trade settlement obligations.” In 2017, the US-based clearing house helped process $47 trillion worth of transactions between governments, business entities, and consumers.

Proposal To Implement A Better Clearing House

According to Lewis, the author (Yoshiro Shinji) of the whitepaper, “Promise: A Decentralized, Peer-to-Peer, Proxy Repayment Protocol,” might have figured out a better way of performing the key functions currently handled by the traditional American clearing house.

On October 31st, Taariq Lewis, Alan Szepieniec, a post-quantum cryptography researcher, and Giuseppe Ateniese, an applied cryptography professor at the Stevens Institute of Technology, published a whitepaper titled: “Stronger Promises: A Privacy-Preserving, Post-Quantum Credit and Repayment System.”

This whitepaper appears to be a follow-up to the one released earlier by Yoshiro, and it proposes that blockchain technology be used for “proxy re-signing.” This, according to Lewis and his colleagues will allow ACH’s payment infrastructure to be implemented on a more efficient distributed ledger technology (DLT) based transaction system.

Building On Fundamental Concepts From Cryptography

The authors of the Stronger Promises whitepaper explained that proxy re-signing is a cryptographic technique that was developed in the 90s by AT&T Labs, the research and development division of the telecommunications company (AT&T).

In addition to implementing ACH’s payment network on a blockchain, the authors of Stronger Promise aim to add sophisticated privacy and quantum resistant features to the new system.

Commenting on the long-term viability of the new type of clearing house, Lewis said: 

This is a business chain that's going to last another 100 years.

Taariq Lewis

Mimblewimble Type Privacy

He added that his team has “tentatively” scheduled the launch of their project in “late 2019” or “early 2020.”

Lewis also mentioned that his blockchain-based clearing house will use a privacy-enhancing technology based on the concept behind Mimblewimble – a project that aims to enhance bitcoin’s (BTC) privacy features.

He further noted that all the privacy-oriented cryptocurrencies currently available do not help to facilitate “legitimate business”, and this will be one of the main areas of focus for his new payments settlement system.