How R3 and major banks are creating a new form of distributed ledger

Rage Review : The R3 blockchain alliance is composed of large banks from various countries, and its every move has also attracted the attention of the financial industry. R3 is currently preparing for the development of a new distributed ledger, Corda, to handle a wide range of contractual agreements for banks. In order to allow major banks to experience blockchain technology, R3 has established three working groups focusing on architecture, use cases, and laws and regulations. These working groups are centrally managed by the laboratory and are specifically used to solve problems encountered in experiments conducted in specific environments in the financial industry and find unified solutions. In the face of competition, R3CEV plans to continue to work with partners to improve service quality and release the core Corda open source platform.

Translation: Nicole

Banking blockchain consortium R3CEV held a workshop last week to discuss next steps for its recently public distributed ledger project.

Several workshops have been held around the world between R3 and representatives of the 43-member blockchain consortium, which includes Goldman Sachs, Morgan Stanley, Credit Suisse and others, with the latest scheduled for New York.

But the workshops are just one of many steps R3 is taking to build Corda, a new distributed ledger that will help banks enforce a wide range of agreements and contracts.

Charley Cooper

Charley Cooper, managing director of the Blockchain Alliance, said in an interview that blockchain technology inspired Corda, but the way Corda is built and tested is completely different from blockchain technology.

He told CoinDesk:

“From the moment we launched this blockchain alliance program, our plan was to not only collaborate, but also facilitate real-world teamwork through governance.”

Complexity of organization

R3 has developed rapidly in the blockchain and distributed ledger industry since its establishment in 2014. In September last year, it announced a collaboration with nine major banks to explore the development of distributed ledger applications.

To manage these dozens of banks and allow them to experience distributed ledger technology (which is believed to have the potential to replace banks), R3 initially divided the project into three working groups, focusing on architecture, use cases and laws and regulations.

Each team is composed of bank staff and R3 employees.

Cooper explained:

"At any given time, new needs arise. We put them together with our senior personnel."

“It’s not us talking to them, it’s us talking to each other and working together to solve specific problems.”

Through global workshops, Wikipedia can share information and documentation, especially experimental results, so that banks can reach a consensus on which technologies can meet specific needs.

Learning process

Initially, Cooper and R3’s early employees divided blockchain technology capitalization progress into three categories.

He said (which eventually became an informal motto):

“Adopt, adapt or create. The key word is ‘or’.”

If a third-party solution doesn’t exist, they’ll create one. But as blockchain consortiums grow, the boundaries start to blur.

The fourth and fifth working groups also joined the original three working groups

After the establishment of the cooperative laboratory, computer experts wore white lab coats with the R3CEV logo. This laboratory is specially used to solve problems encountered in experiments conducted in the specific environment of the financial industry and find unified solutions.

Initially used to provide a sandbox environment for experimentation, the lab eventually became a critical component of the business model and a base for connecting working groups.

During the experiment, computer experts, architects, business experts, and legal advisors appeared in and outside the lab to provide feedback and detect failures to the issuing node banks.

Cooper said:

“We can see immediately once a node is online, and if a node is not running, scientists can immediately see why and fix it.”

The fifth working group is a research group, which joined later and closely followed the staff in or outside the laboratory to collect analytical feedback on how banks operate on the network.

Cooper said:

“So ultimately what we need to do is not adopt, adapt or build, but adopt, adapt and build.”

Dealing with competition issues

Everything from other blockchain consortiums to companies working with other blockchain startups could be considered potential competitors.

In recent months, JPMorgan Chase & Co. and Intel Corp. have unveiled their own distributed ledgers at Hyperledger conferences, a consortium of banked and unbanked companies that includes R3.

The Depository and Clearing Corporation (DTCC), which is currently processing a wide range of transactions worth $1.6 trillion, is collaborating with Digital Asset Holdings (DAH) on a post-trade technology experiment.

Ultimately, though, Cooper told CoinDesk there could only be one solution for the industry.

“We don’t believe that the industry will be taken over by both blockchain technology and distributed ledger technology at the same time.”

In the coming months, R3CEV plans to continue working with partners to improve the quality of its services while also releasing the core Corda open source platform.