Why big banks bet on Besu

Speaker A: Welcome to the American Banker Podcast. I'm Penny Crosman. As banks roll out tokenized deposits and other forms of digital assets, they're having to make technology decisions such as which distributed ledger is the most suitable Ethereum, Solana, Hyperledger or some other. Today we're here with Daniela Barbosa, uh, General Manager of Decentralized Technologies at the Linux foundation who is, is going to help explain why some banks choose Hyperledger fabric and besu. Welcome Daniela.

Speaker B: Hi, nice to see you.

Speaker A: So can you tell us a little bit about the Linux foundation and Linux Foundation Decentralized Trust? How long have they been around and what are some of the types of projects you're doing under that umbrella?

Speaker B: Sure. So the Linux foundation for the last 25 plus years has been the home for what I would call the m most important open source, obviously Linux kernel, where we get our namesake. But over the years uh, there's been hundreds of different foundations really focused either on specific industries. Uh, for example in uh, cloud computing we have the Cloud Native Computing foundation where Kubernetes and hundreds of other projects fall under that umbrella. Um, we have uh, projects even in the film industry with the automotive, um, in the film industry or automotive industry. Um, ten years ago, um, we formed what was then known as the Hyperledger project. Um, this was the first time that uh, big banks and technology companies came together um, to work under the Hyperledger project, uh, to bring what was then spoken about as enterprise blockchain solutions, uh, to the market. That project, ah, it was one project initially which was called Hyperledger Fabric, uh quickly evolved to multiple projects, uh, covering different ecosystems, uh, as well. Um, Today we have 17 different projects that sit under what is now known as the Linux Foundation Decentralized Trust. So let me take a couple of minutes to explain to you and the audience um, what an umbrella looks like. Um, so the LF Decentralized Trust umbrella, um, much like other umbrellas at the Linux foundation, let's say in the telecommunications industry with LF Networking or in the energy industry with LF Energy, um, is a consol projects that fit into that category. Um, so as I mentioned, you know, 10 years ago we started as the Hyperledger project. The first project that came in ah, to the foundation at the time was called Hyperledger Fabric. Um and since then we've really grown um, as the market for decentralized technologies or blockchains if you might call them, has really expanded. Um, we've been at the forefront of most enterprise adoption and the way that institutions have looked at distributed ledger technology, um, and even decentralized identity technology as well as part of their implementations paths. Um, we're very proud. Here we are in 2026. We just celebrated our 10th year anniversary. Um we now have open source projects and very importantly global developer communities across the world that are supporting these open source projects really um, focused on. Sure we have the best uh, open source communities um, that are building source um, in the open with open governance and open development to really meet the needs of institutions uh, as well as government entities um around the world. So um, would love to have the audience kind of understand why institutions, whether they're private sector banks for example or government institutions, we now have 10 central banks that are part of our community come to us because they really understand that that Linux foundation brand and what we bring to the market from open governance and neutrality um, are really critical when we're building market infrastructure um, that we're being built, you know penny for us but also for our children and our grandchildren uh, going forward.

Speaker A: So I know Citigroup bbva, the DTCC and the World bank are among the users of Besu. Can you tell us a little bit about Besu, what it is, what it can do?

Speaker B: Sure. So Bezu was one of our earlier uh, ecosystems that we expanded out to in 2019. Uh the company consensus with a Y, uh contributed Bezu to what was then known as the Hyperledger Foundation. Um and it's really important because that was the first really enterprise focused Ethereum virtual machine project that uh, was made available to enterprises and we saw very quickly adoption of that EVM project with the institutions and I can give you some more examples of that. What's really important about Besu is that you know, fast forward to today. Um, Bezu is a critical infrastructure execution client on the Ethereum mainnet. So the Ethereum mainnet, uh, for those of you who might not be familiar with it, um, runs uh two types of clients. Uh one is an execution client and the other one's a consensus clients and um, diversity of those clients. Right. Making sure that there's multiple code bases and multiple maintainers that are maintaining those code bases is critical to why the Ethereum mainnet is really truly decentralized and neutral when it comes to the code bases. So in 2019 we were happy to bring Bezu on board and to steward that community that today um, as part of the Mainnet, uh, so the Ethereum mainnet is running about 16% of the Ethereum mainnet as an execution client. So really critical to The Ethereum mainnet's um, decentralization uh goals as well. Um, today however, you know BAO is also being run as an Ethereum virtual machine. So this is as a permissioned um, DLT for men, uh for many of the top um, uh tokenization and digital asset plats out there. You mentioned a couple of them um, obviously Citi, Citi Token Services, dtcc, um and others. And what's really important when, when these institutions um, as well as governments and central banks around the world are making decisions is that they are looking for that credible neutrality. Um, Open Source obviously uh, has won the battle. Uh everyone knows that open source is required but really the difference between open source and open Source that's neutrally and openly governed is really critical to these institutions. They want to make sure that they're not picking proprietary software that has vendor lock in. They want to make sure that there's a long term sustainability around maintaining that code. And with that you need to have multiple maintainers from different organizations contributing to those code bases. They want to make sure that there's not a uh, possibility that maybe one company either pivots um, or makes a decision to go elsewhere or their VC firms make the labs for example pivot from what they're doing and then what happens to that code. So the Linux foundation as I said earlier uh, when we were talking Penny, is really critical in bringing that technology to a neutrality perspective where organizations like DTCC and Citi and central banks can really make a decision and understand that uh, from um, who's going to maintain that code, who's going to have that code neutrality? The Linux foundation is the place to do that uh, for these projects.

Speaker A: Well one thing that sometimes or often comes up when you talk about open source software is privacy and security of the application of the data that runs on it. What can you say about the security of Besu and Hyperledger fabric, especially in this age of AI engines like Mythos that can find and exploit software vulnerabilities at blazing speeds.

Speaker B: Yeah, so it's kind of you know two, two parts of that story. Right. From a privacy perspective, especially as you think about permissionless networks and you know the move to a lot of you know um, banking services to permissionless um platforms is that there are um, technologies that have been developed over the last few years that are really focused on uh, making sure that privacy for institutions is not something that is an after um. And even if you look at the newest contribution that we had to lfdt which is uh, the project called linneth um we just announced that a couple weeks ago that is a ZK rollup stack for the Ethereum ecosystem as a layer two. Um, so ZK is zero knowledge proof. So there are actually quite a few projects within our umbrella now that are really focusing specifically on the privacy question that is so important and critical not just for institutions, individuals as well. Um so uh, we're very happy that our community continues to bring that innovation forward um, into production implementation. So as I m mentioned Linneth is uh one of our newest projects. It's layer 2 for the Ethereum Mainnet uh with Linea, um and we have other projects for example like Paladin that is really focused on privacy components for uh Ethereum based uh networks. So privacy is one thing that's quite important um on the security side which is how does our community make sure that open source is um, secure for users to use. Um this is one of the main goals of Open Source is when you do have an open source code base you have more developers, you have more maintainers, you have more eyes on these bugs and these critical uh features. We've obviously been working very much uh closely with uh other projects at the Linux foundation that are focused on security. For example we have a project called the Open Source Security foundation that essentially brings uh best practices in open source um to open source projects and we collaborate with them very closely. All our code bases and our projects that are under LFDT umbrella uh follow enterprise grade best practices for open source software. Um we are tracking very closely what's happening around in the AI space. The Linux foundation is actually one of the organizations that were asked to participate as part of the Mythos, um, uh Access Preview, um and many of our projects have um, currently been putting together uh governance processes and rules around um, AI contributions um and very importantly how to use these models. It's just not Mythos. There's other great models that are able to help the developers identify uh critical bugs or even maybe not so critical bugs but things that uh, humans just didn't have time to get to. Um so this is all important ways that our communities across all Linux foundation projects we have some of the biggest financial uh, services projects we have like I mentioned the telecom industry and the energy industry. These are all critical infrastructure. So for us security uh comes first. Um and this is why we always say that our projects are not just open source but they're open source um, with enterprise making sure that enterprise from a privacy and security perspective are first um as well.

Speaker A: Mhm. So just to go Back to Citigroup is using BESU for its um token services as you mentioned. And this is basically a way for Citi to move its corporate clients money around the world in real time 247 even though its branches might be closed in certain parts of the world, certain hours. What makes BESU a good foundation for that kind of use case? Mhm.

Speaker B: Um, a couple of things. Um, so your description of City Token Services is correct and it's really about the efficiencies that DLT distributed ledger technology, if we strip away the blockchain and the crypto, um, does bring uh, market efficiencies to participants. Um um, we have a great case study on our website that encouraged the um audience to go and read some more details around why Citi Token Services selected Bezu, um, and why they continue to deploy Bezu across uh, um the city token services as they deploy out to different regional, chapter, regional uh, um regions um, that they have um, when they selected Bayzu, um, it was part of the code base like our other code bases here are being governed openly. They have access to maintainers and contributors from multiple companies that support the Bayzu code uh bases and have products and services that they're billed on it. Um, they understand that it's enterprise grade and enterprise focused. Right. So the roadmap that Citi and other banks are very interested in specifically to Bayzu that they can contribute to that roadmap, um, we have uh, had City um engineers actually contribute uh to the code base directly as well. And this is really important for an organization, whether it's Citi or other banks, is that they're selecting a code base that they know will once again be maintained um, by multiple vendors and supported by that um, and that they have a focus on their enterprise use cases which is what we see in the deployment of their use case as well as other banks as well.

Speaker A: All right. And then as you mentioned the DTCC is also using Bezu. I think they're using it for collateral management. And again what makes Hyperledger fabric useful for that purpose?

Speaker B: DTCC uh is actually using Bezu as well, um, and not fabric. We could talk about Hyperledger fabric and other use cases as well. DGCC is a very interesting use case. Um, they've actually been on hard board for the last 10 years. Um, and for the last 10 years they've been experimenting, they've been building core capacity in house. Uh, they've been working with some of the best vendors in the marketplace that have been working with blockchain, um and other types of decentralized technologies. Um, and obviously because of a lot of the regulatory uh, clarity and the letter that they've received, they can now very publicly talk about the work that they've done. Um, I would encourage you, Penny and others to go talk to DTCC because they've been very open about how they make decisions. And when they do select technologies that critical things like where is the code hosted, is it neutrally hosted? Um, is the governance of that code, um, longstanding going to be neutral? Uh, right. That they don't have to worry about a company or uh, VC taking over the code and pushing uh, requirements that might not be aligned with them as well. Um, so organizations like dtcc, maybe over the last year you've seen more of them in the news, maybe they've reached out to you or you've seen more press releases and videos. There's a lot of great content that that team's coming up. But it really is because they built up that institutional knowledge uh, over the last 10 years and their decisions are made for building for the next 10 years and the next 50 years and the next hundred years. And they know that uh, with projects like Bezu, um, they're going to get exactly um, access to that to be able to do that.

Speaker A: Mhm. So if you step back, what do you think banks should think about as they are considering their own digital asset projects? And I know they think about things like speed and volume and privacy and security and compliance with bank regulations. You know what, what kind of advice would you give to people who are considering some of these different ledgers and how they can make that decision?

Speaker B: Yeah, and there's a lot of decisions to make. Right. So you know, you mentioned speed and tps and security and privacy. There's also a lot of discussions and a lot of work going on right now as to when do you put a use case? Right. And I do think it's use case specific. When do you put a use case on a permission ledger versus when do you do a, uh, use case on maybe a layer two or layer one? Um, there's a lot of work happening in our community specifically around things like standards. So we have new projects that are focused on tokenization standards. Right. How do you the standards of how you define a token? It can be used uh, across ecosystems and cross platforms. So there's a lot of work going on really around the scaling of the industry specific to multiple use cases. It's not going to be one blockchain to rule them all. There's not Going to be one privacy approach that is going to meet the needs of every single use case, um, from a jurisdictional perspective and a requirements perspective. Um so really we encourage uh, the institutions, the banks to get involved directly, you know, work with the vendors, work with your favorite vendors who are supporting you, that support all your core banking and institutional integration projects but also get involved directly in the community. Um, get your engineers uh, to events. Uh, for example we have workshops, we have ongoing workshops that engineers from the institutions uh, can join. For example in July we'll have a two day workshop on the topic of privacy in London. Um, and this is a two day event really hearing from the institutions themselves about what privacy is needed but very importantly having the engineers have access to the maintainers and the main contributors to these open source projects and really understanding what are the use cases that they need. And Penny, I think for many years we've been talking about scalability and TPS and uh, is it public, is it permissionless? I think we're also at a critical stage in the industry that in order for the industry to scale to really have major production based implementations across jurisdictions around the world, right? It's not just in the US or in Europe, we're talking Asia, Latin America, India. It really is uh, uh, uh, the next phase is scalability from the industry perspective, right? Having tools for example that the smaller and mid tier banks can leverage uh, and platforms that they can leverage to deploy their own digital asset tokenization standards. Having standards that people can now use uh, and apply without having to support 15 different standards uh, around the world. So I think that the next 10, 10 years is going to be really focused on the tooling in order to bring along the long tail or the medium tail of banking into digital assets and tokenization. The big banks, the JP Morgans and the cities and on and on and on. They have that institutional knowledge. They've been building digital assets tokenization platforms for many years. But how do we truly scale, how do we educate engineers, how do we educate the business analysts um, that are working at these banks and how do we bring more vendors on board to support these implementations? Um and that is a core thing of what the Linux foundation does across all industries as these industries mature. But really what lf decentralized trust and our community has been building and really focused on in 10 years is building uh, bringing code bases and projects into the community that are needed, that are across ecosystems, um, and very importantly neutrally governed and um, supported um, but also bringing in new tooling um, and you'll see new projects that we have in the zero knowledge space, for example, or in the interoperability space. How do we make sure that there's a portfolio of projects that the biggest institutions can leverage, but also the smallest, um, as they bring their digital asset tokenization, ah, initiatives, um, online.

Speaker A: All right. Awesome. Well, um, Daniela Barboso, thanks so much for joining us today. And to all of you, thank you for listening to the American Banker podcast. I produced this episode with audio production by Anna Mintz, Adnan Khan, and When Weiss, Jean Marie. Special thanks this week to Daniela Barbosa at the Linux foundation decentralized trust. Rate us, review us and subscribe to our content at www.americanbanker.com. subscribe for American Baker, I'm Penny Crosman, and thanks for listening.