Many industry observers are expecting the blockchain/distributed ledger technology (DLT) movement to yield real-world results (and tests) this year, which is making some entrenched concerns nervous and some rebels very happy.
In fact, we reported on how HSBC has been using a DLT implementation internally to settle more than three million foreign exchange (FX) transactions and to make more than 150,000 payments worth $250 billion.
But before the revolutionary battles begin, I must caution all sides that openness and interoperability have to be in place first.
I have been covering technology developments since 1987, which includes major wars over Beta and VHS, PC desktop operating systems (Microsoft won), the supposedly open Unix OSes, workstations vs. minicomputers, minicomputers vs. mainframes, multiple search engines and many web browsers.
The only common aspects of these macho-nerd wars are the truths that these battles never improved the technology, made many lawyers rich, and harmed customers at the expense of the vendors.
So, I am more than a little concerned that we may be on the brink of “The Blockchain Wars” because so many vested interests are behind many blockchains (and so many want to see blockchains fail).
My fear is that we will have successful blockchain/DLT implementations that will compete against each other rather than interoperate to bring about that much-needed revolution in efficiency for securities operations. Basically, truly competing blockchains actually defeat the purpose of having them.
But I may be putting the cart before the horse and there may be accommodations being made so that a securities operation can trip the light fantastic among blockchains without too many interruptions.
And, despite my worried and neurotic nature, there is a sign that others are also thinking about a base line of openness and interoperability.
The Blockchain company R3 has just launched “an open blockchain network” that will support a growing number of Corda Network users, and be run by a non-profit organization that is independent of R3.
The Corda Network exists to facilitate “full interoperability between applications and businesses on Corda. This allows data used on one application to be shared onto another, supporting the ‘network effect’ of running multiple applications, and having multiple firms on Corda,” according to R3.
The Corda Network will enable data and digital asset transfers among “communities of nodes (business networks) and different CorDapps,” R3 officials say.
The goal is to facilitate private ecosystems within organizations “or with trusted commercial partners, while remaining interoperable with the wider Corda community where appropriate.” The nonprofit governing body, the Corda Network Foundation, will consist of Corda Network members, including B3i, Capgemini, Natixis and SEB, already supporters of this effort. The foundation’s board will consist of directors from the network and elected by Corda Network members.
“Participants will be able to build their systems to suit their exact needs and ensure the security of their data, while still benefiting from the advantages of a universal network,” says David E. Rutter, CEO of R3, in a prepared statement.
We don’t know yet what other blockchains are ready for prime time and if other blockchain technology companies are willing to truly embrace openness. However, HSBC’s news and R3’s move appear to be steps in the right direction.