Blockchain consortium R3 (R3CEV LLC), a consortium of 42 financial companies that focus on block chain usage, is an innovative firm focused on building and empowering the next generation of global financial services technology. R3 is a financial markets crypto, exchanges and venture practice. They aim to leverage their team’s experience and deep networks within the financial services community, to empower innovators, to promote industry collaboration, and to transform the modern financial markets ecosystem.
Today, R3 announced its first distributed ledger experiment, involving 11 of its member banks, using Ethereum and Microsoft Azure's Blockchain as a Service. The 11 member banks and R3 are connected on a private peer-to-peer distributed ledger, underpinned by Ethereum technology, and hosted on a virtual private network in Microsoft Azure, the public cloud platform offering Blockchain as a Service (BaaS). These 11 banks include Barclays, BMO Financial Group, Credit Suisse, Commonwealth Bank of Australia, HSBC, Natixis, Royal Bank of Scotland, TD Bank, UBS, UniCredit and Wells Fargo. Multiple tokens among offices in North America, Europe and Asia were exchanged over a period of five days, from January 11 to January 15, on this private blockchain. Banks also witnessed instantaneous financial transactions across the global private network. The banks simulated exchanging value, represented by tokenized assets on the distributed ledger, without the need for a centralized third party.
“The tokens, or software code representing a theoretical asset, passed between nodes set up by the banks and R3 with no problems,” a representative for the consortium said in an email to WSJ. “The data about the tokens was intact and the validity of each transaction verified ‘instantaneously’ by all nodes,” he said. Pointing out to the fact that R3 may or may not continue to use Ethereum, the representative said to WSJ, “Although the test used technology from blockchain non-profit Ethereum, R3 is not necessarily aligning itself with Ethereum. It will be testing multiple technologies in its lab experiments.” The 11 banks in the simulation, operating across four continents, each used their own computer, or “node”, and transferred “Ether” to each other – Ethereum’s equivalent of bitcoin. American multinational technology company Microsoft entered the domain of bitcoin by collaborating in November 2015 with ConsenSys, a blockchain venture. Both companies will be working to develop new Ethereum blockchain as service products and new tools for Microsoft’s cloud-based service platform Azure.
R3 will continue to have a series of similar experiments in 2016. David Rutter, CEO of R3, commented: “The transition from vision and hypothesis to application and execution signifies the next major step towards using this technology to transform how institutions interact, report and trade with each other in financial markets. This is a very exciting development, both for R3 and our member banks, as well as the global financial services industry as a whole.”
Richard Herbert, CIO, Global Banking and Markets, HSBC said, “The new R3 globally accessible lab environment is enabling both R3 and member banks to collaborate technically on experiments related to shared ledger and smart contracts technology. As demonstrated by the first project that is already up and running, this lab platform will aid faster experimentation, provide technical agility and aid learning greatly.”