For the last nearly 40 years, we have accepted that a database is something centrally stored and managed by people more knowledgeable on the subject than most of us — namely, the administrators. If an administrator would give us access to the database, then we would be able to read parts or all of it and write in it, depending on the rights we are given. If we have the necessary permissions, we can alter the existing information, created by somebody else. We have come to accept some disadvantages of such architecture — the server may fail, and the information may be lost and workflow disrupted, the data may be corrupted, we cannot see a previous version of the database if we need to. But we didn’t know any better, so we had to put up with it.
In recent years, a groundbreaking new technology that is likely to change most industries has come to existence — the Distributed Ledger Technology (DLT). The distributed ledger is a database replicated on multiple computers at the same time. This database is not managed by a central authority; instead, in the classical implementation of the technology, everyone in the network gets a copy of the same whole database and can add to it. To enter the database, any new addition has to be confirmed by the other participants on the network.
Such a distributed database has a number of notable distinctions from the traditional centralised database:
- The records are securely stored, replicated in multiple computers, with no danger of a loss. In contrast, if they were stored by a central authority in one separate database, damage, or corruption of that database would result in the loss of the records.
- A record cannot be changed. If anybody tries to change the record, then their version of it would contradict the versions of the majority of the network and will be discarded because it is different from the majority version.
- The network establishes trust — each record in the database has been confirmed by all network participants, so there is only one truth for all.
- The database is decentralised and distributed over multiple computers and transactions are completed directly between the parties. There is no central authority with the power to censor, alter, filter or interfere with the information in any way.
The DLT has found application in various scenarios, such as asset registry, interbank reconciliation, intellectual property rights protection and royalty payments, supply chain optimisation and traceability, tracking the movement of shipments, with the list of applications expanding daily.
The Corda Platform
The classical implementation of DLT has the obvious advantages of being a secure, immutable, transparent decentralised platform for establishing trust between mistrusting parties and transferring value across the network. However, it also has features that are unacceptable for some businesses, namely, lack of confidentiality of the records and limited transaction speeds. Different modified versions of distributed ledgers have evolved in an effort to overcome these hurdles and make the technology applicable for different business uses.
To accommodate the needs of the financial industry, the R3 consortium has developed Corda, an open-source distributed ledger platform.
Corda is originally built to record, manage and automate financial agreements. However, assets are not exclusive to financial products but have covered insurance and global trade finance in the business-to-business space.
Meet Corda, the DLT with a difference
Corda is different from most of the other DLT implementations in that:
The communication in Corda is point to point, as opposed to broadcasting to the entire network, thus resolving any privacy concerns. In Corda, only the parties involved in a transaction can see it.
- It is permissioned — the participants in the Corda network are known entities, who have been invited and have obtained permission to join the network
- Corda utilises “smart contracts” with legal prose so that they are compatible with traditional legal systems and could be material in case of a dispute in the real world*.
- The consensus mechanism in Corda is based on validation from specific network participants called notaries, avoiding the time consuming and energy inefficient block mining. Consensus, in the context of a distributed ledger, means that all participants must see the same data and agree to it and to the history leading to the current state.
The Corda Network
To facilitate the application of the platform, the Corda developers have deployed the Corda Network — a publicly available network of nodes operated by network participants. The Network enables participants to move value and identity data between the businesses and to reach agreements and automate transactions that are legally binding.
Much like the internet, the Corda network provides the backbone on which various applications could be run. The network can support a number of self-organised sub-groups of participants, and each group would have an operator — a party that manages admission to the subgroup and the application of the subgroup rules. The Corda network provides key services:
- Identity operator service, providing admission to the network after reviewing the submitted credentials. With this service, the network provides assurance regarding the identities of the network participants enabling them to enter into legally executable transactions.
- Network map service, enabling the participants to find and communicate with one another over the network.
- Notary service, providing network consensus and guaranteeing the uniqueness, history validity and finality of each transaction without the need for costly block mining.
- Support service, providing the smooth running of the network and resolving any incidents related to other services of the network.
Corda platform industry solutions
The Corda platform has been successfully deployed in projects in the highly regulated financial services sector and is the preferred platform for the implementation of blockchain technologies in the insurance industry. Consortia in various industries have found Corda to be suitable for coopetition — collaboration between competitors for mutually beneficial results.
Corda enables automation of numerous processes in insurance by applying the business logic of the policy through smart contracts. Using such contracts gives insurance companies the ability to :
- Collect information regarding a claim, verifiable by third parties
- Implement automated payments
- Eliminate fraudulent claims
- Increase the speed of processing
- Eliminate mistakes resulting from manual handling of data
Corda has demonstrated its superiority to the alternative DLT solutions for the insurance sector and has been selected by B3i, the insurance industry blockchain initiative, as the platform of choice for industry-wide solutions.
ZKP3: Medical Claim Management System using Corda
Corda was designed in partnership with large financial institutions taking into consideration the strict regulations imposed on the industry. The Corda platform has found application in this most demanding environment bringing significant efficiencies to the underlying processes. Applicable scenarios include:
- Managing contract lifecycles in post-trade processing of swaps
- Facilitating cross border Instant Money Transfer payments between banks directly, bypassing the complicated nostro account relationships
- Settlement of equity post-trade transactions
- Collaboration between multiple parties in agreements regarding syndicated loans
Project Marco Polo: An Open Trade Finance Platform Powered by Open APIs and DLT using Corda
Project Ubin: Clearing & settlement of payments & securities with DLT using Corda
Contemporary supply chains often contain a great number of interdependent parties that need to cooperate to make possible the assembly of a final product. Corda provides the platform for recording verifiable, trusted and immutable data across the supply chain. The platform enables the supply chain to:
- Show information origin and verify its authenticity
- Create automated auditing in case of a system failure
- Trace the components origin and eliminate the use of counterfeit components
The current state of information flows and data management in the healthcare industry is inconsistent and disorganized, to the detriment of the service users. Patient privacy is not guaranteed, patients do not know who owns their information and how it is used. Important historical information may not be available to the healthcare institution that needs it to make a decision regarding the treatment of the patient. Corda offers a solution for these issues by:
- Providing a network for sharing the important information between healthcare institutions in the form of verifiable immutable records
- Protecting patient information confidentiality
- Ensuring compliance with healthcare regulations
- Arranging involvement of health insurance providers and automating claims processing
Construction is an industry where collaboration and communication between numerous parties are crucial for the realisation of the final product. In a building project, it is often the case that contractors hire subcontractors, who then delegate the work to their subcontractors, and it is not clear to the developer who does what and when. Corda can address these issues by:
- Providing a platform for sharing data about the progress of the works
- Providing clarity of the identities of the parties doing particular works
- Protecting the confidentiality of the data by transferring it on “need to know” basis
Corda solutions for the construction industry were proven in the hackathon, organised by University College London’s Construction Blockchain Consortium in September 2018. One fully functional solution was delivered by the INDUSTRIA team participating in the event.
The Corda platform is also applicable to use cases in government, trade, procurement, and any other businesses that find the Corda network useful for their specific needs.
*N.B. Special thanks to Andy Bachmann of Deloitte Switzerland for the valuable contribution!
INDUSTRIA is an award-winning global consultancy and development firm that creates web, blockchain and fintech solutions, helping both companies and ecosystems significantly reduce the costs and complexity of doing business. Official partner of R3.
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