The CTO of R3, Richard G Brown, has revealed today they are working on a distributed ledger platform for financial services called Corda.
I’m delighted to confirm that R3 and our member banks are working on a distributed ledger platform for financial services: Corda.
For the last six months, my team and contributors from our membership have been building a distributed ledger platform prototype from the ground up, specifically designed to manage financial agreements between regulated financial institutions. I am massively excited by the progress our team, led by James Carlyle, our Chief Engineer, and Mike Hearn, our Lead Platform Engineer, are making and I think the time is right to share some details.
Corda: A Distributed Ledger for Recording and Managing Financial Agreements
Corda is a distributed ledger platform designed from the ground up to record, manage and synchronise 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.
Corda’s key features include:
- Corda has no unnecessary global sharing of data: only those parties with a legitimate need to know can see the data within an agreement
- Corda choreographs workflow between firms without a central controller
- Corda achieves consensus between firms at the level of individual deals, not the level of the system
- Corda’s design directly enables regulatory and supervisory observer nodes
- Corda transactions are validated by parties to the transaction rather than a broader pool of unrelated validators
- Corda supports a variety of consensus mechanisms
- Corda records an explicit link between human-language legal prose documents and smart contract code
- Corda is built on industry-standard tools
- Corda has no native cryptocurrency
Brown goes on in the blog to talk about how they will handle core elements of Blockchain technology.
A critical piece of the Corda philosophy is that our problem is to ensure that “I know that you see the same details about a shared fact that I see”.
But this does not mean that a third party down the road also needs to see it: our consensus occurs between parties to deals, not between all participants.
Furthermore, in Corda, the only people who need to be in agreement about a fact are the stakeholders to that fact: if you and I agree about something that pertains only to us then why should we care what some completely unrelated third party thinks? And why would we even think of sending them a copy so they could opine on it? So, in Corda, we let users write their validation logic in time-tested industry-standard tools and we define who needs to be in agreement on a transaction’s validity on a contract-by-contract basis.
Just like every other distributed ledger out there, we need to be sure that two valid, but conflicting, transactions cannot both be simultaneously active in the system. But we also recognise that different scenarios require different tradeoffs. So Corda’s design allows for a range of “uniqueness service” implementations, one of which is a “traditional blockchain”. But it doesn’t need to be and, for our purposes, we also need implementations that make different tradeoffs under Brewer’s CAP theorem: in particular, some financial services use-cases need to prioritise consistency at the expense of availability in the event of a network partition.
On immutability and authentication:
Here, Corda’s design departs very little from existing systems: our data structures are immutable and our building block is the exchange of digitally-signed transactions.
So Corda is very traditional in some respects – we directly apply the “authentication”, “immutability” and “uniqueness service” features of blockchains but we depart radically when it comes to the scope of “consensus” (parties to individual deals rather than all participants) and “validation” (the legitimate stakeholders to a deal rather than the whole universe or some arbitrary set of ‘validators’).
Corda’s design is the result of detailed analysis and prototyping with their members and will be open sourced when the code has matured further.
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