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An Early Blockchain Experiment by Global Banks is Revealed

Last Updated March 4, 2021 4:46 PM
Samburaj Das
Last Updated March 4, 2021 4:46 PM

Blockchain startup R3 has revealed the completion of a new test that involved a total of 11 banks connected to a peer-to-peer decentralized distributed ledger. The experiment is likely to figure among the earliest examples of multiple banks using a distributed ledger to exchange value, successfully.

In a press release today, R3 co-founder Todd McDonald has announced the completion of a distributed ledger experiment where 11 global banks participated in the simulation of exchanging trades and value on an R3-managed distributed ledger.

Each bank was connected to a private, R3-managed distributed ledger (it’s version of Bitcoin’s blockchain) that was underpinned by Ethereum technology and hosted on a VPN (virtual private network) in Microsoft’s public cloud platform, Azure.

The experiment spanned banks in Asia, Europe, North America and Australia. The experiment signals a milestone in banking finance and trade where settlements were successfully achieved without the need for a third-party clearing or settlement house.

The test ran continuously 24 hours a day, for five days between January 11 and January 15 among banks in four continents, revealed Financial News.

The banks involved were Barclays, BMO Financial Group, Credit Suisse, Commonwealth Bank of Australia, HSBC, Natixis, Royal Bank of Scotland, TD Bank, UBS, UniCredit and Wells Fargo.

The press release, penned by McDonald stated:

In bringing a significant number of major banks onto a multi-lateral distributed ledger with global scale, the experiment – which was curated in the R3 Global Collaborative Labs (GCL) environment – represents a significant milestone in collaboration for the R3 consortium and a major step forward for the application of distributed ledger technology across the entire industry.

R3 further revealed that it will announce additional collaborative projects among its partner banks over the course of 2016. The announcement has also been the first revelation that Microsoft’s Blockchain-as-a-Service (BaaS) offering is also intertwined with R3’s distributed ledger efforts. The software giant previously announced that Ethereum powering its blockchain platform and toolkits that are now being offered to customers of Azure.

David Rutter, CEO of R3 stated in the media release:

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.

Late last year, London-based Standard Chartered and Singapore-based DBS revealed a partnership which saw the two banks develop a distributed ledger for trade finance in Singapore. Significantly, the revelation came after the two banks successfully tested the technology among themselves, before proceeding to develop the platform further.

In contrast, the latest R3-led banking experiment is significant due to its scope and number of banks involved, with 11 in four continents.

R3 has been in the news frequently in the past few days after its lead platform engineer and former Bitcoin core developer called Bitcoin a failed experiement in a public post. The controversial post saw plenty of coverage and criticism from several prominent Bitcoiners. Talks of an R3 banking conspiracy against bitcoin were also flatly refuted by Mike Hearn and Todd McDonald.

R3 initially announced its blockchain endeavor to bring together a collective of banks to integrate blockchain technology to the current banking in September 2015, with nine participating banks. Toward the end of October, that number rose to 25 participating banks. A month later in November, 5 more banks joined to constitute a total of 30 global banks. November also saw R3 announce the hiring of Mike Hearn.

Finally, R3 added 12 more banks to the consortium in mid-December and announced that the initial window for new bank members’ admittance had closed.

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