In a recent blog, “When is a blockchain not a blockchain” R3 noted that its Corda product is a distributed ledger and not a blockchain, and that it was never stated as such. The blog was in response to public comments claiming that R3 has only recently recognized that blockchain technology will not address wholesale financial industry needs.
The blog noted R3 is flattered by the attention Corda has recently received after sources noted that the words “No block chain’ because we don’t need one” was used in an R3 presentation. The blog said R3 has from the beginning referred to Corda as a distributed ledger platform and not a traditional blockchain platform.
The Merkle ran a story with a headline, “R3 Admits Defeat, Stops Blockchain Development.”
A tweet stated, “R3 concedes defeat: “No Block Chain, because we don’t need one. GAME OVER!” The tweet included screen shots of the R3 presentation stating why Corda doesn’t need blockchain.
Comments piled on on Reddit. One stated: “Good thing it only took a huge group of massive corporations and tens of millions of dollars to figure out that they could just keep using their old tech!”
R3’s blog took issue with these comments. It observed that over time, any type of distributed ledger incorrectly became known as a blockchain. R3 recognized early on that blockchain could not be applied to wholesale financial markets without careful consideration.
When R3 launched in 2015, it was among a handful of companies inspired by blockchain technology and its possible application to wholesale financial markets. Blockchain was the most frequent example of distributed ledger technology in mainstream consciousness.
Over time, the term “blockchain” was associated with any distributed ledger, even as the technology evolved to meet different user needs.
Many of the articles about Corda referred to it as a blockchain-based technology.
“While we were almost certainly guilty of slipping into this semantics trap now and again, we’ve said from the beginning that Corda is a distributed ledger platform, not a traditional blockchain platform,” the blog stated.
“The marketing team at Canon must have spent countless hours working out how to stop people referring to all copy machines as Xeroxs,” it further noted.
Richard Brown, technology chief at R3, stated on Dec. 27, 2016:
“Corda is a distributed ledger platform designed from the ground up to record, manage and synchronize financial agreements between regulated financial institutions. It is heavily inspired by and captures the benefits of blockchain systems, without the design choices that make blockchains inappropriate for many banking scenarios.”
Blockchains are specific software pieces made to handle virtual currency transactions. R3 realized early on that it could not be blindly applied to financial markets without considering changes needed to meet privacy, regulatory and scalability issues.
Corda was built to address financial services industry needs. It is inspired by and captures benefits of blockchain systems, but designed to meet the needs of regulated financial institutions.
The Merkle article noted that R3 still maintains a team with technological knowledge and will be able to come up with software that could improve the financial industry.