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The Weekend Read: Nov 6

A quieter week of news, as the cosmos digests the fact that the Chicago Cubs are World Series champs after a short 108 year drought. Looks like Marty McFly was only off by one year...

Industry Announcements

Congratulations to Brad Garlinghouse for his appointment as CEO of Ripple:

Chris Larsen is stepping in to become executive chairman of Ripple’s board of directors as of Jan. 1st of next year, the outgoing chief exec and co-founder told Fortune on a call. Larsen has named Brad Garlinghouse, who’s presently chief operating officer and president, as his successor.
“I could not be happier about how Brad and the company have performed this year,” Larsen said, ticking off a number of milestone achievements in recent months. He mentioned helping financial firms pull off a cross-border payment trial with the banking consortium R3, landing a $55 million Series B investment round, and forming up an interbank steering group to set standards for global blockchain-based transactions.

As per the above, Chris Larsen will be moving into the exec chairman role and will maintain a very active role within the company.

Dan Middleton of Intel provides a very nice overview of Intel's Sawtooth Lake, one of the two base fabrics in incubation at the Hyperledger Project (the other being IBM's Fabric with a capital F):

Finally there is a lot of energy surrounding private transactions. The Sawtooth-Core team is experimenting with private transactions using all the tools available including pure cryptographic techniques such as NIZK as well as trusted computing like Intel® SGX. This is an ill-defined space right now. It’s common to hear explicitly contradictory requirements like, the desire to discover assets on the ledger and settle the transfer of assets between parties while at the same time not listing the assets or parties on the ledger. Proposed solutions include recording only opaque identifiers for transactions but not the transactions or the assets themselves. A database that only has transaction IDs but no transactions or assets probably loses a lot of value. However, it’s possible that more interesting solutions exist using computationally expensive means like zero-knowledge relations or using trusted hardware with private enclaves.

R3 partner RBS provided details on their Emerald approach that gives an example of DLT as "distributed clearing house":

"So fundamentally what we have built is a distributed clearing house, if you were to operate it as a commercial entity. Or a distributed real time gross settlement system, if you were to operate it as a central bank's ledger," said Richard Crook, head of Innovation Engineering at RBS.

"Cash-on-ledger" or anything related to the representation of value and the execution of payment on ledger is a very large topic within the R3 book of work. Chris Larsen referenced the Ripple-R3 trial recently conducted, and there has been a lot of activity related to cross border and domestic payments, both via very radical approaches and by 'tinkering' within existing systems. One such example was our "Project Jasper" with Bank of Canada, Payments Canada and the largest Canadian commercial banks; Carolyn Wilkins of BOC commented this week that more details of that effort will be released soon.

R3 Announcements

My customer service skills are a bit rusty

My customer service skills are a bit rusty

I had the pleasure this week of participating in the first event of R3's inaugural philanthropy month, where about a dozen folks from our NY office volunteered for a day at Harvest Home Farmers Market in Harlem, which is "dedicated to increasing access to local, farm-fresh produce to residents of some of New York City’s most impoverished and underserved communities." Check out pics from the day at our Facebook page (wait, we have a Facebook page?)

Richard Brown and Mike Hearn were featured guests on the Epicenter podcast this past week. The interview gives a good introduction to the back story of both R3 and Corda. It also gave Richard and Mike the time to go more in depth on the "problem first" approach to the design and development of Corda. Couple this podcast with this article from Tabb Group on the data and reconciliation challenges that financial institutions continue to face...and the promise of DLT to rehabilitate these systems:

If inconsistent, unsynchronized data is such a big problem, though, why isn’t more being done to fix the issue? Why are firms so accepting of internal reconciliations as a normal part of the daily business process? Perhaps it is because the data inundation occurred organically, without an overall data strategy in place from the beginning. In some cases the powers-that-be may not even be aware that there is a problem. The armies of people performing the manual remediation of exception items are doing their jobs too well, catching and fixing errors before they cause trading or compliance nightmares. Often data reconciliations are occurring across business siloes. Each department puts out the fires for its internal and external customers separately, not at a corporate level.
By utilizing a single, immutable source of transactional data, as espoused by proponents of blockchain and distributed ledger technology, the need for multiple internal reconciliations and the risk of trade or reporting errors is vastly reduced. Elaborate enterprise data warehouses can be streamlined to capture single, immutable records. The reduction in the total cost of ownership for the reconciliations process, personnel and systems could be dramatic.

And finally, we are very pleased to announce two new members of the R3 consortium. First up, China Foreign Exchange Trade System (CFETS) becomes our latest member from China, and we are very excited to work with a leader of technology and standards within Chinese capital markets. Next, ABN Amro has joined our ranks to further add to our presence in northern Europe, and will bring with it an already strong body of work within blockchain-based innovation. Welcome to both!