Gavin Thomas, Technology COO, London recounts the journey of open-sourcing Corda
Credit Suisse recently completed a global hackathon event to find cost savings and efficiency applications using R3’s Corda distributed ledger platform.
Teams from India, the United States, Great Britain and Poland competed to find cost savings under a 20:20 framework, meaning winning solutions needed to show the potential to reduce costs by twenty percent within twenty months.
“We see Blockchain as a disruptive technology that has real potential to reduce the bank’s operating costs and risk,” said Ray Mulligan, Chief Architect for Credit Suisse’s Global Markets division. “The recent Credit Suisse blockchain hackathon reinforced that idea. In just two days, we saw how quickly our developers were able to design and build blockchain-enabled applications that show the potential for this technology to drive significant efficiency and savings gains for the bank.”
The bank’s developers began work on January 24 in India to build distributed ledger applications across a variety of business lines and back-office functions. Work transitioned from Pune, Bangalore and Mumbai to London, Wroclaw, New York and Raleigh, North Carolina over the course of the first day, and continued through January 25. Credit Suisse committed to fund the leading solutions that showed 20:20 potential for further development and implementation.
Corda was designed specifically to address the cost and efficiency issues that have plagued banks and other financial institutions for decades. We made the platform available for open source development in order to encourage collaborative thinking and innovation, and this hackathon is the perfect example of what can be achieved when open communities combine expertise to address the real-world pain points affecting the industry.
Now, with the technology maturing, firms can find ways to drive additional benefits that might be more specific to their businesses. In just two days, Credit Suisse’s developers were able to design and build distributed ledger-enabled applications that show the potential for this technology to drive significant efficiency and savings gains for banks.
A big thanks to all involved at Credit Suisse for making this hackathon a tremendous success!
R3 in the News
The R3 team enjoyed a few days this week to 'geek out' at the Construct 2017 conference in SF. We were glad to share the insights of our very own Clemens Wan with the wider blockchain world:
In remarks yesterday at CoinDesk’s developer conference, Construct 2017, R3 associate director and former Credit Suisse blockchain architect, Clemens Wan, predicted that 2017 will be defined by DLT pilots, while 2018 will see the technology migrate to production.
The comments come just months after the open-source release of its custom distributed ledger technology (DLT), Corda, became a part of the Linux Foundation-led Hyperledger blockchain project’s collection of enterprise technologies.
Since then, R3 said it has attracted more than 600 users to its slack channel, and more than 19,000 visitors to its website, Corda.net, as it seeks to reach its next milestone, the release of a test version of its DLT system in the first or second quarter.
In this light, Wan framed R3’s technology as one that requires broader buy-in from enterprises and corporates to achieve a strong network effect and top-level applications. Wan said: "Corda is the Xbox Live, it’s the ecosystem, it’s the connectivity. We want to focus on the platform and services."
As Clemens points out, R3 will be very focused on building an ecosystem of partners in 2017 and beyond, which follows on from a few of our 2016 announcements of partnerships with the likes of Microsoft and Calypso Technologies. Our goal is to bring both the value of our network and our foundational technology to that partner application ecosystem, so that all participants benefit. If anyone has interest to learn more about our partnership approach, please contact email@example.com
We are very pleased to announce the addition of Africa's largest bank to the R3 family: welcome aboard Standard Bank!
“Collaboration will be critical to unlocking value and we want to be actively involved in exploring and testing how technology like blockchain can be adopted by financial institutions. Being a partner member of the R3 network will provide us with an excellent opportunity to accelerate and enhance our adoption of this new technology,” says Peter Schlebusch, Standard Bank’s Chief Executive for Personal & Business Banking.
And if anyone happens to be attending the FIA-SIFMA Asset Management Derivatives Forum this week, please feel free to stop by and say hello.
Member Spotlight: ING
We are very fortunate to have the chance to work closely with ING across many of our DLT efforts. This article is a very nice overview of not only the hard work being done, but it also gives some well deserved attention to Mariana Gomes de la Villa and the Blockchain Innovation team:
“For us, 2016 was about experimentation and getting to know the technology: how it works, how we can use it and what the pitfalls and limitations are. This technology wasn’t built for the financial industry so there are constraints and it doesn’t always cover our requirements,” Gomes de la Villa explained.
In trade finance, too, where processes are largely paper-based, labour intensive and open to fraud, a proof-of-concept was completed in August. It demonstrated that shared ledger technology could reduce operational and compliance costs of trade financing by 10 to 15 percent and increase bank revenues by as much as 15 percent.
Blockchain has the potential to profoundly change the financial services structure", said Ivar Wiersma, head of Innovation at Wholesale Banking. He compares blockchain to that other ‘foundational technology’ that changed the world; the internet. It all started with the birth of email in the 70s, but it took decades before the internet became the basis for many of today’s business models.
“Blockchain started eight years ago with bitcoin. Now we need new developments like smart contracts and digital identity so blockchain can become the technology standard for the next generation.” Wiersma added: “Collaboration is a given. It’s a network, so working on your own is useless. It’s like being the only one with a mobile phone.”
We look forward to highlighting more of our member stories throughout 2017
The Week (or two) in Links
- Bank of Japan to Host Distributed Ledger Forum Next Month
- PBOC Set to Be First to Issue Digital Bills
- Bosch, Cisco, BNY Mellon, others launch new blockchain [IoT] consortium
- Hyperledger Project reflects on blockchain politics
- Law Firm Hogan Lovells Learns to Grapple with Blockchain Contracts
- Mozilla Internet Health Report: Building a Better Blockchain
- Video: Introducing the Internet of Agreements by Vinay Gupta
...and completely unsolicited advice for the Big Game: guac over salsa, pilsner over IPA, and never bet against Brady and Belichick (unless the Giants are involved). Go Pats!
One of the common requests we have received from our members over the past year has been: in an environment in which there are multiple different blockchains and distributed ledgers in use by various organizations, how can they interoperate?
We took this question and commissioned a paper with Vitalik Buterin who provided a survey of several current and proposed interop solutions. We also asked Nigel King and Ross Nicoll from the R3 London office to put together a short view point and summary of Buterin's survey.
Below are the finished documents originally sent to our members this past September. Distributed got a first look of it a couple weeks ago and put together a short article on the paper as well.
Chain Interoperability: R3 Viewpoint
Nigel King and Ross Nicoll
Chain Interoperability: Vitalik Buterin
In the words of the ancient philosopher D.L. Roth, "I heard you missed us. We're back!" Actually, I haven't really heard that, but we are back anyway. A few programming notes before we start: it has been a while since the last post, but if you read the fine print of the title carefully, it is called "Weekend" and not "Weekly" read...so our only promise to the reader is to delivery a few interesting links stitched together with
snarky learned prose and random jpegs during any weekend hours, and not necessarily every weekend...with that, onto the links.
News in the Spotlight: DTCC Trade Information Warehouse
We were very excited to announce earlier this month our collaboration with DTCC, IBM and Axoni, along with a large subset of our member banks, in implementing a distributed ledger solution as a piece of market infrastructure (in this case, DTCC's Trade Information Warehouse). This project encapsulates a lot of the themes that have driven R3's approach over the last few years, such as collaboration, focusing on the problem and a desire to move to a shared truth across the industry. The last phrase "across the industry" is important. If we are lucky enough to be successful with this implementation, we must ensure that this new piece of market infrastructure fits in and interoperates across the new "financial market operating system" that we and other firms are working hard to implement. Over the coming weeks, R3 will be speaking more about our efforts in this space and will walk through our Platform and Services strategy in more detail.
A few other related notes. A belated congratulations to the Axoni team for closing their latest round of funding. And I may be most proud of being part of an effort that got mentioned in the column of the king of informed snark, Matt Levine: "But as I often say when I read these stories: You could just have a list." I would kindly point Mr. Levine to Richard Brown's recent post for the answer: On distributed databases and distributed ledgers
Our team just completed a very successful week in Asia, which started with our first Members Conference based in Asia, hosted in Hong Kong by our friends at AIA. R3's Tim Grant then had the chance to inform the crowd at Next Money Fintech HK that 2017 is "The Year of the Pilot" (pic below) as everyone runs hard and fast at production implementations. We also hosted successful Corda meet ups in Seoul, Tokyo and Singapore (pic below) to round out the week.
For those who would like to stay up to date with our Corda meetup schedule, please visit our Meetup page. Our next R3 hosted event will be in NYC on Friday, February 10 at the NYC HQ of our friends at Rise (sign up here). And we are pleased to see other meetups pop up that are led by the wider community, like this one in Vancouver. For those attending the upcoming Construct event, make sure to reach out to R3's Michael Dowling and Clemens Wan (aka Clembot).
Also a belated welcome to our friends at Credicorp to R3 as our first Spanish-speaking Latin American member! We have other announcements in the hopper, including new regulatory members, that we will be sharing in the coming weeks.
A Bunch of Links
- American Banker: Banks should slow down to get blockchain right
- Harvard Business Review: The Truth About Blockchain
- McKinsey tells banks that tech will kill their profits! But luckily (according to Accenture) blockchain tech "could save investment banks up to $12 billion a year." Couple with: Banking’s Biggest Hurdle: Its Own Strategy
- Smart contract research paper (summary article here) by Vikram Bakshi, Dr. Lee Braine and Chris Clack: Smart Contract Templates: essential requirements and design options
- Digital Trade Chain: 7 Banks Could Go Live With Blockchain in 2017
- Ripple’s Ex-CEO (Chris Larsen) Joins HSBC Tech Group
- A conversation with Blythe Masters and Mike Bodson: Blockchain: Moving from Hype to Reality
- Thomson Reuters: Blockchain technology: A chain reaction
One last thing. As we (hopefully!) mature as an industry, the weekly news items of "imagine if!" and "blockchain explained!" articles should get less relevant and definitely less interesting. So back at Blog HQ (my attic), we are thinking about how we could change our (somewhat) weekly(ish) updates so that they keep pace with people's interest and focus. So please let us know (on LinkedIn or Twitter or directly) your views, we want to hear them. Cheers.
2016 has been a tremendous year for our industry. To say there has been a whirlwind of achievement would be an understatement. As an organization we pride ourselves on what we have accomplished in such a short timeframe. We look towards 2017 with excitement to further deliver on the promise of this technology. Below we look back on the most memorable moments.
R3’s CEO debuts at No. 18 on Institutional Investor’s annual ranking of the most influential figures in financial technology
The Financial Times names R3 as one of the top 10 financial technology companies to watch in 2017
R3: A Year in Review
- Jan 20: Trade execution: R3 and 12 member banks used distributed ledger technology to execute transactions across the global private network in Microsoft Azure
- Mar 3: Fixed income trading. R3 tested five blockchain technologies to stimulate fixed income trading between 40 banks
- Mar 13: Charley Cooper is featured in public vs. private blockchain debate via WSJ
- May 5: Risk Magazine profiles David Rutter. R3's CEO discusses his vision for distributed ledger technology in financial markets with Risk magazine
- Jun 16: Project Jasper is the first project in DLT supported by a central bank and regulatory group
- Jul 13: Smart Contract Templates. R3, Barclays, ISDA, Norton Rose Fullbright and UCL collaborated to address the challenges of developing master templates for smart contracts
- Aug 10: Trade financing. R3 and over 15 banks trialed smart contracts for invoice financing and letter of credit (LOC) transactions
- Aug 24: Release of the first non-technical Corda white-paper
- Sept 4: Reference data management. R3, Axoni and Credit Suisse built a distributed ledger prototype to improve data accuracy and reduce risk in reference data management
- Sept 20: R3 partners with Axoni, SIFMA and 7 buy/sell side institutions to prove how DLT can provide immutability of reference data
- Sept 26: Intel Sawtooth Lake. R3 and eight banks trialed Intel Sawtooth Lake for trading, matching and settling US treasury bonds
- Oct 20: R3's Blockchain platform Corda developed by banks to be open-source
- Oct 21: Cross-border payments. R3, Ripple and 12 member banks trialed Ripple's XRP digital currency for cross-border payments
- Nov 8: Asia blockchain centre of excellence. R3 collaborated with the Monetary Authority of Singapore (MAS) to launch its first dedicated distributed ledger technology centre of excellence in Asia
- Nov 10: KYC registry. R3 and ten banks developed a proof-of-concept for a KYC registry that addresses the challenges associated with satisfying Know Your Customer requirements
- Nov 18: Barclays and R3 host the second Smart Contract Templates Summit
- Nov 29: R3 partners with Calypso to build the first "CorDapp"
- Nov 30: R3 Corda Ledger Is Now Open Source
- First China-based company and first insurance company – Ping An
- First Northern American Insurer - MetLife
- First exchange - BM&FBOVESPA
- First tech company – Thomson Reuters
- First Automotive - Toyota
- Primer Banco Hispano – Credicorp
- First African Bank – Absa Bank
- First Credit Card – Synchrony
- First Payments Services – Qiwi
- First Title Insurance – First American
Some 2016 Snaps
In the long history of humankind, those who learned to collaborate and improvise most effectively have prevailed.
Darwin’s point holds true. Critical mass, momentum and co-operation are absolutely essential if we are to transform financial services and the communications and transactional framework we rely on.
This was our rationale for bringing banks together to jointly develop distributed ledger technology for the financial services industry from day one.
In R3 we have created a fast moving financial technology product company with an ownership structure which provides a balanced governance, combined with the leadership and stewardship of the best technologists in their respective fields.
The spaghetti junction of shared legacy infrastructure as well as individual front, middle and back office systems is testament to the resulting mess when banks disappear into development silos.
The overall cost of maintaining this legacy infrastructure is incalculable and there is risk around every corner, embedded into the old Cobol and Fortran code under the layers of many of those systems.
That is why we came together with an initial group of nine banks in September 2015 to create R3. A highly experienced and effective technology team was assembled and ready for action two months later.
Fast forward a year and there are now over 75 members of the R3 group – with two additions in the last week alone – working together on a diverse array of projects and developing technology to address some of the most serious pain points affecting the industry.
There is no secret. We hired the best, assembled and activated a powerful and engaged membership base and connected them together to leverage the network effect distributed ledger technology delivers.
Together, we have designed, built and launched Corda, the open-source release distributed ledger platform which will set the standard for this technology in global financial markets.
This is the only platform designed by and for its users and represents the world’s largest collaborative distributed ledger effort in financial services. It is unique and it is a landmark moment for the market.
Distributed ledger technology will have such phenomenally powerful network effects that it is hard to imagine serious institutions deploying base-layer ledger software that is anything other than fully and wholeheartedly open.
The response and engagement with Corda has been exceptional and only a few weeks after open sourcing the platform we have already had a vast number of contributions from the public developer community.
Amidst the excitement of the Corda roll-out, it’s hard to ignore the running commentary on the progress of our fundraising programme.
The motivation and accuracy behind some of the noise has sometimes been questionable, but such is the nature of working on such high-profile projects. It’s a complement to be discussed and we are very happy with constructive criticism, but better when the discussion is informed and accurate.
We have always expected the make-up of the consortium to change over time – our member base is so large and so diverse, it would be unrealistic not to expect some institutions’ priorities, resources and focus to travel in different directions.
We have new members joining the project all the time and some banks may choose to change the way in which they engage with us as we move forward, but the critical mass we have built over the last year means members can be confident they are investing in developing industry standard solutions that will be the building blocks of the new financial services infrastructure.
The financial institutions that have shown the vision to join R3 are by that very action ensuring the technology we adopt is built using common code and protocols, ensuring seamless interoperability and integration.
This is a direct hedge against the risk of replicating the disjointed infrastructure financial markets are forced to operate on today.
We remain focused on perfecting Corda and looking ahead to our objectives and deliverables for 2017 working together with our members.
We are on the cusp of a new era in financial technology, and over the next year banks will begin to reap the benefits that have been promised to them since the financial services industry recognized this technology’s potential to deliver efficiency, lower risk, security and cost reductions.
Let’s be clear: the power of distributed ledger technology lies in its network effect – and that goes for the build as much as the usage. The past few years were characterized by blockchain hype. Leveraging the combined power and expertise of our diverse and growing group of members, R3 will make 2017 the year of blockchain delivery.
R3 at TechCrunch Disrupt
Our CEO David Rutter hit the stage during TechCrunch Disrupt in London earlier this week for an extended interview. Among the highlights was his call that we will see substantial activity on a distributed ledger in 3-5 years, and that R3 will have a DLT-based product in the market by the end of 2017, much the delight and cheer of our product department. (Side note: Dave called me and asked for any background on this event. I pointed him to this clip...not sure it was helpful). In a DLT world, he noted, the idea of hiding a ticket or manipulating a trade will be a thing of the past, which could bring much needed trust back to Wall Street. On trust, he also pointed out the irony of many libertarians and bank antagonists: We all trust our banks, though we like to say we don't. If we get a chunk of money, we put it in a bank. And for the quantitative participants in the audience, he noted R3 and others in the space addressing a $3.6tn opportunity to re-work the global payments infrastructure, cited from a recent McKinsey report.
Smart Contract Debate
The Chamber of Digital Commerce put out a doc this week entitled Smart Contracts: 12 Use Cases for Business & Beyond that features a forward by Nick Szabo. Luckily for your lazy author, R3's Ian Grigg has written a very concise response to some of the points in the paper on his Financial Cryptography blog:
The finance end of town is only interested in smart contracts within the fully contractually-informed framework. That's because accidents happen and the go-to place to sort out disasters is the courts, with their facility for dealing with the unexpected or unusual. This notion goes back to the Magna Carta, which was ultimately a brawl over the right to a fair day in court.
If you want a pithy principled statement, it is like this: people who trade in large values want someone to mind their backs. These people believe that smart contracts will always break, and we need a way to get predictability back into the contract.
Which brings us to the DAO - that $150 million lesson in how not to build a smart contracts platform. [SNIP] To interpret a short, pithy principle, the investors in the DAO found that nobody's minding their backs. And when that happens, the brawl starts. Magna Chaina?
I know that some folks can't stomach it, but for the rest that have an interest in what legal and financial professionals have to say about smart contracts, please see this excellent summary of R3's recent Smart Contract Templates summit by Burges Salmon.
The Federal Reserve released a paper this week called Distributed ledger technology in payments, clearing, and settlement:
In the context of payments, DLT has the potential to provide new ways to transfer and record the ownership of digital assets; immutably and securely store information; provide for identity management; and other evolving operations through peer-to-peer networking, access to a distributed but common ledger among participants, and cryptography.
I asked Tim Swanson for his views on the paper: "The new paper provides a good objective overview on what distributed ledger technology is and what it is being used for., as well as a number of interesting data points. For instance, "In the aggregate, U.S. PCS systems process approximately 600 million transactions per day, valued at over $12.6 trillion." I actually ended up citing this number several times this past week at an event in Korea. The paper also makes a distinction between the settlement finality that permissioned ledgers can provide versus the probabilistic finality that un-permissioned / public blockchains provide."
The Fed also provides a comment to add to the Smart Contract debate above:
DLT has also raised the possibility of writing terms and conditions between parties into computer code to be executed automatically. In order for these “smart contracts” to be enforceable, they must have a sound legal basis. Contract law is an established set of rules that govern the basic principles of contracting, including formation, amendment, termination, and dispute resolution.
Open Development and Other News Across the Industry
I had the pleasure of attending the Hyperledger Annual Member Summit this past week. It was a great opportunity to connect with folks from across the globe and to hear more about the projects underway underneath the Hyperledger umbrella. Chris Ferris, head of the Hyperledger Technical Steering Committee, put together his reflections in this blog post.
One highlight for me was to watch our CTO Richard Brown keep the audience in rapt attention with his overview of Corda and some of its unique design decisions. The R3 tech team has continued to post to the corda.net blog with more updates on their thinking behind the code. ICYMI, click here for James Carlyle on distributed ledgers as a 'truth layer' and click here for Mike Hearn on 'why UTXO?' We also had the chance to catch up with our friends at Digital Asset, who released their non-technical white paper earlier this week, which I believe Richard will share some thoughts on in the coming weeks.
The folks at Circle made a splash with their announcement this week of their open source platform Spark and their intention to focus exclusively on "global social payments" that happen to use blockchain(s) as rails. Or, if you are r/bitcoin, totally betraying the Bitcoin community...And for those with a penchant for oral histories of 'cryptographic ceremonies', be sure to check out this article on the launch of Zcash. Or if you like Bloomberg articles with all the snark of Matt Levine yet with none of his wit or deep understanding of financial markets, click here (but I wouldn't recommend it).
...and finally, many thanks to my colleague Tim Grant for letting me crash his set for the debut of Project dR3am, and to the
thousands dozens of folks who turned out to support us. Rock on.
Besides the cake, we were also gratified to see so much interest on release day. We had our first pull request merged within a few hours of release, thousands of unique visits and over 40 forks of our Github repo. For more coverage, see Euromoney, American Banker, WSJ and Fortune articles. From the Fortune piece:
“Our intention is to encourage other people in the community to contribute to it, to build on top of it, to drive its design and adoption,” said Richard Brown, R3’s chief technology officer. “We want a large number of people people downloading and using it,” he said.
“People will be surprised when they dig into the code of the technical white paper,” [Mike] Hearn told Fortune on a call. For one thing, he said, Corda is designed to be compatible with tools that programmers within large organizations are likely already familiar, such as relational databases for storing digital information and Microsoft SQL, a tool for accessing data contained therein.
We also heard from the wider internets on their views of Corda. The feedback and constructive challenging of the Corda design and implementation decisions is exactly what our team is looking for from the wider community. And of course we also got other, less constructive feedback, which I can break down into two broad categories: 1. suggestions for us to kindly lodge certain appendages and objects into various openings big and small, or 2. the equally helpful jokes about SQL databases (this is perhaps the most tired of all the "burns" we hear, and as someone who grew up with the last name McDonald, I know a tired burn when I hear one...).
We know there is a lot to wade thru in exploring Corda (56 pages for the white paper Mike? Dang). As a starter, check out Richard's intro blog posts and Mike's review on what lies ahead, all on our Corda blog. Even better for the TL;DR crowd, Richard has a new Corda explainer video here that wraps up in a tidy 3 minutes. Enjoy!
R3 Application Partners
There was another bit of news this week that perhaps got swept up with the Corda release. On Tuesday, we announced our partnership with Calypso Technologies to jointly develop the first post trade application on our smart contract network (a CorDapp in R3 lingo):
Calypso will be the first application partner to leverage the R3 platform, which will allow financial institutions and their technology partners to work more closely together in a safe and efficient distributed ecosystem. The platform records and manages financial agreements between counterparties, leveraging distributed ledger technology to guarantee a consistent, accurate, auditable, reportable record.
Pascal Xatart, CEO at Calypso said: "We are thrilled to be working with R3 and honored to be their first application partner. The alignment between the two firms is exceptional – our deep expertise in capital markets combined with their industry-leading distributed ledger technology will allow us to develop a range of innovative applications quickly and efficiently. Our current matching solution is only the beginning."
We have been hard at work over the past year building out the framework of our financial-grade network. This past week we have debuted two core pieces of that framework. One is obviously our distributed ledger platform, Corda. The other is captured in the above partnership announcement: our clear intention to build and support an ecosystem of partners to help drive value for all the participants in the emerging R3 network. Our friends at Calypso are a fantastic example of such a partner, one that brings deep domain expertise, understanding of their client's needs and shares the strategic view that the next generation of financial software and services will be driven via smart contract platforms. We could not be happier to have them as our first partner.
More Shout Outs
Congrats to the CME team on their collaboration with The Royal Mint on their tokenized gold trading platform dubbed Royal Mint Gold (RMG):
Vin Wijeratne, CFO of The Royal Mint said the addition of a blockchain-type system will mean tracking ownership in near real time and therefore some costly administration attached to this process can be dispensed with...Sandra Ro, digitisation lead at CME Group, said: "This is going to be a permissioned network. We will have all known actors and there will be a mechanism by which validators will validate the transactions...This is very much a digital gold offering as an investment product. And it happens to be that it is using a blockchain ledger to record transactions. This is a trading platform."
Another congrats to the Hyperledger team, which announced surpassing 100 participants in the open source effort this week. I will be at the annual Member Summit in Bklyn on Wednesday and Thursday and look forward to catching up with everyone in person. For those who can't make it, I would suggest the excellent webinar from Digital Asset's Dan O'Prey here. But if you do make it, I promise you a freshly printed business card with our cool new logo...
How do you write a summary of the weekly news when you are the news? I have been thinking about that for the last few days. I have mentioned in the past that one of the lessons that I took from my trading days is that everyone is talking their book, always, even if they don't realize it (or won't admit it). I try to guard against that in this blog, but it is inevitable to some degree. I also don't want to pull a 'Zuckerberg in China' gambit and 'erase' the news. So, for a selection of articles on R3 this week, click a few of these links.
With the Thanksgiving holiday here in the US, I was in a reflective mood on all the things that I am thankful for this year. I am thankful to be part of a wider ecosystem that is trying hard, in many diverse ways, to find the next thing. I am thankful to work with a team that has the strongest collective resolve I have ever witnessed. I am thankful for creative Tim Swanson memes. I am thankful to work with folks like Richard, James, Mike and our whole tech/product team who are focused on building things (instead of with those focused on trying to tear things down from the sidelines of life). I am thankful to be working harder than I ever have in my life and enjoying (almost) every minute of it. On to the links.
Corda Open Source
This Wednesday, November 30 is the day for Corda open source. Richard Brown weighed in with another update/preview of what is to come:
Distributed ledger technologies will have such phenomenally powerful network effects that it is unthinkable that serious institutions would deploy base-layer ledger software that is anything other than fully and wholeheartedly open. And it’s why we’ve been committed all along to releasing Corda just as soon as we were sure it was heading in the right direction. It is and so we are.
We’re really proud of Corda and its progress to date. But, that said, Corda is far from finished. Mike Hearn will soon be publishing a “warts and all” description of quite how much work we still have to do. This is true for all other platforms in this space, of course, but I feel a particular responsibility to be transparent given the ambitions we have for Corda and the uses to which it will be put.
How to get Corda on November 30: Corda’s home will be corda.net. Head over...for links to the codebase, simple sample applications and a tutorial to get started writing your own CorDapps.
Corda is still young, but to echo what Hyperledger's Brian Behlendorf states below, we feel it is better to open up early rather than late. Now is the time to invite contributions from outside. As the code matures further in the coming months and reaches a stable enough point where detailed code review makes sense, we'll be looking forward to analysis and review from the industry's leading experts. And others.
American Banker has a fantastic review of open source in DLT, highlighting both the advantages and risks to this approach. It is worth a read in full:
"Let's say someone wishes to connect a Chain network that has digital assets running on it with a Corda contract," [Adam] Ludwin said. "If those projects are open source and well documented, and that documentation is public, then whoever might be building the interfaces or connectors for these networks and services will have a much easier time doing so. That's why open source is a boon for interoperability."
[SNIP] Moreover, it is a way for engineers to give back to the engineering community.
"When external engineers can review the architecture and code, they can assess the quality of the projects companies are working on. This serves as a great recruiting tool," said Max Levchin, CEO of the digital lending startup Affirm and a co-founder of PayPal. "When you open-source, it allows third parties to build applications on top of yours, [a process] which acts as a distribution channel for your own product."
As the article points out above, open source is hard. This week saw Ethereum initiate a planned fork on Tuesday, which lead to an unplanned fork a few days later, which the Ethereum community rushed to fix. This seems to have led to a bit of schadenfreude twitter style from the Bitcoin community. as they reposted this article in quite a few threads. Meanwhile, earlier in the week the head of strategy for Ethereum-based Consensys penned this article entitled What Venture Capitalists Got Wrong About Bitcoin:
Instead, the infrastructure built for bitcoin can increasingly be co-opted for use by new tokens. These new tokens don’t necessarily add any value for the venture capitalists who originally invested in bitcoin. To illustrate what is happening: Imagine if a railroad company in the 1800’s spent millions laying tracks, only to see a second (and third, and fourth) railroad come along and use the finished tracks for free, to ship more cargo in faster and safer cars.
Interesting to see the perspectives of the two sides, with some viewing all this activity as zero-sum, winner (chain) takes all...while others share our view that success in one 'camp' can serve as a positive multiplier across the whole space.
RegTech (cont.) and LegalTech
This week saw the big finale of R3’s initial global regulatory tour, culminating in Eltville am Rhein, where our very own Charley Cooper spoke to the Deutsche Bundesbank’s Central Banking conference devoted exclusively to blockchain technology. For those curious about the participants, see this link. Here is Charley's report:
The conference lasted for four days and covered a wide range of topics, with my remarks focused on the importance of public/private collaboration as a driver of technology innovation in the highly regulated financial services industry. In the lead up to that event, Isabelle Corbett and I barnstormed through four other countries in seven days, meeting one-on-one with Swiss and Nordic regulators as part of our relentless efforts to involve government agencies and oversight bodies in our work from the outset. A huge thanks to Credit Suisse, UBS, Danske Bank, Nordea, and OP Financial for helping us navigate their home turf. R3 representatives have now met with regulators in almost all of our member jurisdictions, including central banks, securities and derivatives overseers, consumer protection agencies, law enforcement, tax authorities, NGOs, trade associations and legislators. It feels good to be home.
Risk Magazine posted a very thoughtful piece as a follow up to R3's Smart Contract Template Summit (it is even worth the pain of signing up for a free trial!). Our partners at Norton Rose Fulbright announced the publication of our joint white paper on the legality and enforcability of smart contracts. You can request a copy of the paper here or members can contact R3 directly.
Swift announced this week that they would become more open and vocal about their exploration into DLT, which is very welcome news. They also announced some details on their latest POC.
Damien Vanderveken, head of R&D at Swift Labs, says: "Swift has been targeted in the press as a legacy incumbent that will be doomed by DLT. But we believe Swift can leverage its unique set of capabilities to deliver a distinctive DLT platform offer for the community."
Congrats to our friends at the JP Morgan Blockchain Center of Excellence for their open sourcing of Quorum, which you can access here. This is yet another example that the above American Banker article highlighted of the growing acceptance of open source within finance, and the advantages that even the world's biggest banks see in an open source approach. We look forward to exploring Quorum more during the upcoming Hyperledger events in December.
And finally, we are very happy to welcome China's Minsheng Bank to the R3 consortium, as another member in our growing network China and North East Asia.