R3 was started in 2015 with a simple goal: to decrease friction and provide sufficient interoperability between financial institutions. By increasing interoperability, organizations can be more efficient, mitigate risk, and decrease costs.
R3 has launched Corda, their Distributed Ledger Technology (DLT) based product, which looks to address not just financial applications, but uses for governments, supply chains, and insurance industries. Our video gives you all you need to know about R3 and Corda doing business on the blockchain!
What is R3?
R3 was started in 2015. Banks were frustrated with the current status quo on how they did business with each other. The technology in the sector was greatly lacking, creating inefficiencies which in turn raised costs.
Their goal was simple: decrease friction and provide sufficient interoperability between these financial institutions. By increasing interoperability organizations can be more efficient, mitigate risk, and decrease costs.
Is R3 really a blockchain? No, it uses distributed ledger technology. But they aren’t trying to be a blockchain. These private entities desire greater control over their ecosystem. But they can make a system that has the characteristics of a blockchain, just suited to their specific needs.
But this distributed ledger technology is only going to work if an accepted standard is adopted by many different institutions. And that’s what R3 is for: to help create this agreed upon standard.
I’ve said it before, but if you’re creating a group or standard, your results depend on your members. R3 has a global team of over 125 professionals serving over 100 global financial institutions and regulators.
R3’s product: Corda
The results of R3’s efforts can been seen in the launch of their product, Corda. Corda is an open-source blockchain project designed specifically for business. Corda actually lets you build your own blockchain that can interact with other chains, with underlying smart contracts allowing businesses to transact directly with minimal fees.
Corda claims to ensure privacy in several ways. The first three we see in public blockchains, while the last characteristic makes Corda unique:
- Full encryption of the peer-to-peer network,
- Key randomization with automatic identity management creates semi-anonymous transactions,
- The use of a Merkle tree, which allows only certain information to be revealed,
- Intel Software Guard Extensions (SGX) enclave technology which allows records to be verified while data remains private.
Corda has no cryptocurrency built into the platform and does not require mining-style consensus, which greatly cuts down costs.
The goals of Corda are to increase efficiency, while providing a platform on which to grow a business. Despite it being built for financial services, we’re already seeing some unique use cases pop up outside of that sector.
Possible applications of R3’s Corda
With finance, the applications are obvious. Moving money from location to location with as few fees as possible, all in a closed, private ecosystem that the transactors control. Businesses aren’t going to use a blockchain for things they don’t want to make public, which is why we are seeing them explore distributed ledger technology.
A second application is insurance. The insurance industry is basically there to give assurance to businesses and individuals. But this industry has way too much overhead. Processing and settling claims takes forever. Corda enables automation through the use of smart contracts which can:
- Act as a means of data collection or filing a claim
- Completely automate the payment process
- Reduce fraud with verifiable and immutable data
- Increase customer satisfaction with speed of processing
Finally, government. The whole system of tracking deeds is antiquated. The IRS wouldn’t have the same need if the auditing process is automatic. There are some things governments do well, but there are several inefficiencies too. Technology like Corda could help the administration of services become easier and less expensive to execute.
The applications of Corda aren’t limited at all, and several new ones will probably pop up as new problems arise. But the message is clear. R3 and Corda are capitalizing on the potential of this new technology, and in doing so, they’ve become a leader in business on the blockchain.
Business on the Blockchain is a new series aimed at keeping you up to date on all of the big business moves towards blockchain technology. More and more businesses are exploring cryptocurrencies and blockchain, and we’re here to help you understand how some of these businesses are making this transition. It’s an exciting time for blockchain adoption, check out which businesses are jumping onto the wave!
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