David Rutter of R3 Talks Blockchain | Summary and Q&A

December 6, 2016
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David Rutter of R3 Talks Blockchain

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In this video, David Rutter, the CEO of r3, explains the significance of blockchain technology for banks and why they are adopting it. He discusses the high cost of compliance for banks and the opportunity blockchain presents to create a more efficient and secure financial infrastructure. Rutter also touches on the unique aspects of blockchain technology and its potential to revolutionize the way financial transactions are made and confirmed. He addresses concerns about existing security and cloud technologies, highlighting the benefits of blockchain in terms of transparency, efficiency, and data security. Rutter also explains the decision to open source r3's distributed ledger, Corda, and the advantages of getting more stakeholders involved in its development. He further discusses the role of member banks in the consortium and the challenges and benefits of working with a large network of institutions. Rutter provides insights into the progress of r3's funding round and the expected timeline for substantial adoption of blockchain technology in the financial industry. Finally, he discusses the projects r3 is working on with governments, particularly in the area of interbank payments.

Questions & Answers

Q: Why are banks interested in adopting blockchain technology?

Banks are highly regulated organizations and the cost of compliance is significant. Blockchain offers an opportunity to create a more secure and efficient financial infrastructure, which can save banks significant costs. These new technologies allow for reconsideration of how financial transactions and payments are made, which is appealing to banks that want to ensure the security of their customers' funds.

Q: What is unique about blockchain that makes it attractive to banks?

Blockchain offers features such as transparency, data security, and decentralization that traditional technologies lack. It provides a tamper-resistant record of transactions, eliminating the need for third-party reconciliation. By moving transactions to the cloud and utilizing cryptographic tools, banks can create a more secure financial infrastructure and reduce the reliance on outdated technologies.

Q: Is blockchain just hype? Why not use existing secure and cloud technologies?

While existing technologies can serve certain purposes, they often do not communicate well and require complex API integrations. Blockchain offers a unique opportunity to create a more holistic and efficient financial infrastructure. It allows for the seamless transfer of data and assets between banks, streamlining processes and reducing costs. Blockchain technology is not just about hype, but rather a genuine innovation that can improve the financial industry.

Q: How does blockchain address the issue of trust in financial transactions?

Blockchain creates a tamper-resistant record of transactions, ensuring transparency and trust. It eliminates the need for manual reconciliation and reduces the risks of fraud and manipulation. For example, with blockchain, there would be a tamper-resistant record of a transaction immediately created in the cloud, making it easier to determine payment obligations and preventing ticket hiding or manipulative trades.

Q: How does r3's blockchain technology differ from other companies like Chain or Circle?

r3's approach is more holistic, aiming to build a comprehensive financial infrastructure that can serve multiple purposes. They work closely with member banks and focus on interoperability between different solutions, such as payment systems, trade finance, and derivatives. Companies like Chain or Circle may focus on delivering specific solutions in a more targeted manner.

Q: How do government projects fit into r3's roadmap?

r3 is working on government projects that involve tokenization of fiat currencies for interbank payments. These projects aim to enable faster, more efficient, and cost-effective payment transactions between banks. The involvement of governments demonstrates the recognition of blockchain's potential to improve life for citizens and enhance financial systems.

Q: When will r3's blockchain technology be widely adopted?

R3's blockchain technology is expected to be substantially adopted in the next three to five years. This timeline accounts for the need to build out the necessary infrastructure and gain regulatory and industry acceptance. However, r3 expects to have products in the market by the end of the next year.

Q: What are some of the potential applications of r3's blockchain technology?

R3 is working on various applications, including trade finance, payment systems, and collateral movement. These applications aim to improve the efficiency and security of processes such as asset registries, interbank payments, and securities ownership transfers. The goal is to simplify and expedite financial transactions while adhering to regulatory requirements.

Q: Why did r3 decide to open source their distributed ledger, Corda?

R3 believes that opening their technology up to more scrutiny and allowing others to build applications on it will result in a more robust and widely adopted solution. By open sourcing Corda, r3 aims to foster innovation and collaboration within the industry. Additionally, the privacy and security features of Corda make it suitable for applications beyond the scope of r3's focus.

Q: Is there concern about having too many member banks in the consortium?

While having a large number of member banks seems overwhelming at times, it also provides the advantage of a more diverse and globally dispersed network. Building consensus among various stakeholders is crucial to drive meaningful change in the financial industry. Additionally, having a larger network of member banks helps create a governance structure similar to that of a public company.


In summary, blockchain technology presents an opportunity for banks to create a more efficient and secure financial infrastructure. The high cost of compliance and the need for improved transaction processes are driving banks to adopt blockchain. R3's approach focuses on building a comprehensive financial infrastructure that facilitates interoperability between different solutions. Their distributed ledger, Corda, has been open sourced to encourage innovation and collaboration. Projects with governments highlight the application of blockchain to improve payment systems. While substantial adoption of blockchain technology may take a few years, progress is being made, and the market can expect the deployment of blockchain products by the end of next year. The ultimate goal is to create a more transparent, efficient, and inclusive financial system that benefits individuals and institutions alike.

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