One major criticism on private Blockchain development initiatives led by banks and financial institutions has been the ambiguity in the coding language and structure of permissioned ledgers. The R3 Consortium is attempting to neutralize it by open sourcing its technology.
R3 Corda, a private Blockchain platform specifically developed for financial establishments with massive transactional volumes by R3CEV, is officially rendered open source by the consortium after over 70 of its member financial institutions came to a consensus in setting a standard for the Blockchain technology.
Vision behind open sourcing R3 Corda
While R3CEV’s core purpose in the open sourcing the Corda platform is to set an industry standard for the Blockchain market, the company states that it hopes to see other companies building innovative applications on top of Corda using its open source code.
As many may understand by now, the complexity and sophistication of Blockchain-based platforms go further than mere technical difficulties. Economical and political issues are often considered as the core components of the development phase.
Thus, it is significantly costly and time-consuming for both small startups and large conglomerates to build flexible and secure Blockchain platforms.
R3's chief engineer James Carlyle, told Reuters, a member of R3:
"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.”
Budget difficulty for financial institutions
Several research institutions including Markets Reports Hub (MRH) estimate that the valuation of the Blockchain market is predicted to pass US$2 billion by the end of 2020, primarily due to the rising investments in Blockchain development by banks.
MRH amongst many research firms stated that hundreds of millions of dollars are currently being spent on the development of Blockchain platforms by financial institutions annually, and it is becoming difficult to deal with.
Considering that most Blockchain projects often turn out to be incompatible and inapplicable due to differences in security measures and internal protocols, R3 states utilizing open source technologies is more efficient when costs and time are considered.
"Blindly investing millions of dollars in small, disparate technology projects is not appropriate for banks at a time when budgets are stretched," said R3's chief executive David Rutter.
"The risk of backing the wrong horse could far outweigh the potential gains. Given that the power of this technology lies in its network effect, the consortium model is the ideal method to get it off the drawing board and into the wholesale financial markets,” Rutter added.