Protect your corporate IT network from hackers and other unwanted intruders with Proxy Sentinel™. Click here for all the details and get the peace of mind you deserve.
Back to our Homepage Proxy Sentinel™ high performance Internet proxy server and secure firewall solution Firewall Sentinel™ secure & powerful Internet firewall solution About Internet and GCIS Frequently Asked Questions on Internet security issues Internet Security Industry News - Stay informed of what's happening Contact Internet today and order your Proxy Sentinel™ or Firewall Sentinel™ server now!

Banks and financial institutions are uncertain about blockchain technology

Sponsered ads:
Read the latest IT news. Visit Updated several times daily.

If you need reliability when it comes to SMTP servers, get the best, get Port 587.

Get a powerful Linux Dual-Core dedicated server for less than $2.67 a day!

Share on Twitter.

November 29, 2016

The overall benefits and various advantages of using distributed ledgers and blockchain technology for greatly improving security at investment banks and financial institutions has again come under scrutiny following the departure of several banks from the prominent Blockchain Consortium R3.

We've just learned today that Goldman Sachs, Morgan Stanley, Santander and the National Australian Bank have just left the consortium and without providing much details.

R3's official statement on the four departures isn't particularly revealing either, essentially claiming only that it has always accepted and expected a high churn rate among its members.

Spokespeople said-- “Developing blockchain technology such as this requires dedication and significant resources, and our diverse pool of members all have different capacities and capabilities which naturally change over time.”

However, the so-called 'departed capacities and capabilities' have not significantly changed relative to other R3 members, and that's what is important to note among other things.

What has obviously changed for founding member Goldman Sachs and Morgan Stanley (a second introduction member) and Santander (a third member) is the swollen size of the consortium those businesses were joining in the first place.

At least it's described as a consortium per se, although that's not totally clear. But R3 is, more exactly, a limited liability company (LLC) receiving funding from its financial sector members.

While it doesn't provide a complete members list, R3 is currently believed to have over seventy financiers, including some of the largest investment banks in the world, and it seems to be precisely because of its rapid expansion, up from an initial 9 in September 2015, that some of those earlier joiners are leaving.

Martha Bennett, an analyst with Forrester Research, told us that she saw “some quite complex dynamics at work in the R3 consortium, given the different strands to its various activities, the prolonged discussions around the fund-raising, the decision to open-source Corda, etc,” all of which could have contributed to the exodus.

Dr Garrick Hileman of the University of Cambridge's Centre for Alternative Finance, noted that “while the assembly of so many major banks by R3 was impressive, such a large number of members inevitably leads to organizational challenges.

Additionally, and this is critical, it has not gone unnoticed that the proofs-of-concept that R3 has produced have had a very limited number of participants, asserted Hileman.

Overall, financial technology executives appear to be capable of making the most exciting innovations boring, and their approach to blockchain technology has been exemplary, especially when those executives seem to be searching for a commercial advantage through the early adoption of a disruptive technology.

“What’s happening at R3 may be indicative of the distributed ledger space in general,” Hileman asserted. “Many executives over the last year were excited by the blockchain enthousiasm, but now 6 to twelve months later, I expect we’ll see a blockchain shakeout soon in the coming quarter.”

He added-- “Some previously hyped blockchain use-cases are likely to be tabled or shelved, while others in less regulated areas than capital markets are more likely to be deployed.”

Considering the overall number of various companies involved in the R3 Consortium, there has inevitably been plenty of disagreement on what that “disruptive” technology should be, with few of the proofs-of-concepts offering interoperable, let alone complementary, services.

That member size makes it “difficult for Goldman Sachs to control and influence the consortium’s direction,” claimed Hileman. “There is an obvious conflict with such fiercely competitive companies, all seeking to drive forward to their own corporate advantage, working together in harmony on democratizing and transparency enhancing technology.”

Hileman also asserted: “It's important to look at which companies have withdrawn from the consortium.” He noted that Goldman Sachs, “arguably the top investment bank in the world, may have had a hard time seeing how it could obtain an edge within such a large group.”

He added: “The R3 Consortium employs many of the most talented people in the blockchain industry, so some will see the exodus of Goldman and the other three members as a real setback for the overall industry. But public blockchains, such as Bitcoin and Ethereum, arguably gain from the lack of cohesion at companies like R3. The most compelling aspect of R3 is its consortium members, not its technology.”

For his part, Bennett chimed in-- “During the first 6 months or so of the consortium's life, it's initial mandate was to identify the most promising use case (s) and then proceed with determining how to develop the required processes and software to translate them into blockchain reality.”

Source: The R3 Consortium

Sponsered ads:
Read the latest IT news. Visit Updated several times daily.

If you need reliability when it comes to SMTP servers, get the best, get Port 587.

Get a powerful Linux Dual-Core dedicated server for less than $2.67 a day!

Share on Twitter.

Home | Proxy Sentinel™ | Firewall Sentinel™ | FAQ | News | Sitemap | Contact
Copyright © Internet    Terms of use    Privacy agreement    Legal disclaimer