Major Banks Take First Steps Towards Creating Industry Standards For Blockchain Technology

In a rather surprising turn of events, the blockchain solution being developed by central banks will be made open source. This news came as a major surprise to cryptocurrency and distributed ledger enthusiasts. Corda, the big project under development by the R3 consortium, will be accessible to anyone in the world. Whether or not this will automatically turn it into a new financial infrastructure standard, remains to be seen.

Open Sourcing Corda Is An Interesting Decision

For the longest time, people assumed the Corda blockchain would be another solution that will continue to be locked behind closed doors. Even though this will not be a public blockchain, the code will be open sourced. This is a rather surprising turn of events, although it is clear that central banks want to establish some form of industry-wide blockchain standard.

In a way, this should be seen as a positive development. Open sourcing the code will allow for valuable community feedback while also inviting people to change the banking infrastructure first hand. Although not all suggestions will be taken to heart by the engineers, pointing out flaws is never time wasted.

While banks readily agree that distributed ledgers will make their systems more efficient, it will also lower the costs. This is one of the primary reasons why financial institutions have flocked to blockchain technology as of late. Unfortunately, most banks do their own little things, making it more difficult to even think about industry standards.

According to Reuters, R3 Chief Engineer James Carlyle stated:

“We want other banks and other parties to innovate with products that sit on top of the platform, but we don’t want everyone to create their own platform … because we’ll end up with lots of islands that can’t talk to each other. If we have one platform with lots of products on top, then we get something that’s more like the internet, where we still get innovation but we can still communicate with each other.”

At the same time, this news does not mean that Corda will be a success by any means. Even though the project has the backing of several dozen major banks, there are still a lot of questions regarding the use of a blockchain without proof-of-work. After all, the goal is to remove any points of failure.  But what if the new technology presents an even bigger systemic risk?

A lot of money has been invested into this project, and only time will tell whether or not it was a smart business decision. Blockchain technology has a bright future across many different industries, including the financial sector. As is always the case, however, the first “generation” of proprietary technology may not check all the right boxes from day one.

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