R3, a financial innovation enterprise, is a big proponent of blockchain-based distributed ledger technologies. They want to bring the power of blockchain to global markets. R3 leads a consortium of over 50 of the world’s top financial institutions, though Goldman Sachs, Santander, and, most recently, Morgan Stanley have dropped out to pursue their own blockchain solutions.
Regardless, R3 is still going strong, following their mission to create a global financial-grade ledger. Most recently, R3 visited Bermuda during their ILS Bermuda Convergence conference. They were there giving a demonstration on the benefits of blockchain’s distributed ledger technology.
The finance and insurance industries are ripe with potential Ethereum use cases. If R3 can bring blockchain to Bermuda, that’d be a big step towards widespread adoption of this revolutionary technology. At the conference, a team from R3 performed a real-time demonstration of how blockchain technology could actually be used by companies in Bermuda.
Using multiple screens, representing the different parties that might be involved in a specific transaction, R3 showed how information can be immutably stored in the blockchain as a public ledger. This was done to show a real-world use case for how this type of technology could be applied to everyday business. Ethereum, or blockchain in general, would allow for simpler bookkeeping, increasing efficiency while potentially lowering costs for transaction processing. Stafford Lowe, head of human capital management at R3 and a resident of Bermuda, said:
“We had brokers, underwriters, Bank of New York Mellon, who are a big trustee, the Bermuda Monetary Authority, people from underwriting to operations on the reinsurance side, and guys from the advisory companies. We wanted to take an industry loss warranty on a real ledger. So we had a broker screen, an underwriter screen, and a trustee’s screen. We followed it through the process and saw the numbers change on everyone’s screen. This was a representation of three people’s very separate views on things.
But the most important thing was that whenever an action was performed you saw something get written to the ledger. That really resonated with people. It was a real example. It was designed to be a starting point. This was something we knocked together in two weeks; imagine if we built this thing together, and where we could get very quickly.”
R3 aimed to demystify blockchain, seeing as how the technology is on the verge of being implemented in tangible ways. Bringing their demonstration to Bermuda was a particularly good idea due to Bermuda’s “sophisticated financial services ecosystem” and the island’s tradition of people working together and innovating, according to Lowe.
An Ethereum use case relevant to Bermuda could involve helping them improve the credibility of their finance industry. Bermuda is tired of their reputation as a tax haven. What better way to dismiss those accusations than by utilizing the transparency of blockchain technology? Through Ethereum, a network can be set up so nothing can be written to the blockchain unless consensus is reached by multiple parties. This not only mitigates fraud, but keeps records publically accessible, due to the open nature of the blockchain.
Bermuda’s cultural values of innovation and working together are core standards in the concept of a shared, public ledger. It’s possible Bermuda could see a widespread implementation of blockchain in the near future. Mr. Lowe continued:
“Bermuda should be looking at this as a balance between a threat and an opportunity. We have an amazing opportunity to get ahead of our competing jurisdictions. We have 20 or 30 of the most globally significant insurance and reinsurance companies here all within half a mile of each other. We have a highly accessible and pragmatic regulator in the BMA, which is very interested in fintech innovation.
While it is true there are not hundreds of technologists on the island, there are some. We have the end-users of the technology, the people who will be interacting with this new technology. They are the ones who have the opinion on how to build this.”
So it seems as much as Bermuda is considering blockchain technology, R3 is also evaluating Bermuda. Even though Mr. Lowe feels an enterprise grade solution may still be a few years away, if Bermuda shows genuine interest in leading the blockchain charge, R3 could consider setting up a base of operations on the island. Which surely has everything to do with the potential for deploying a blockchain network there, and not the beautiful weather and scenery.