The system, developed in co-operation fintech firm CurrencyPort, is set to solve issues associated with the traffic overload on a single ledger.
Japanese credit card expert JCB is pushing towards blockchain technology development via a partnership with Tokyo-based fintech firm CurrencyPort.
Today, JCB announced that it will co-operate with CurrencyPort on research in the blockchain area. In particular, the two companies will seek to develop a technology that connects multiple separate blockchains and thus allows them to share their excess capacity.
As a result, the companies hope to solve the problems associated with traffic overload on a single ledger. Each blockchain has a limited capacity, which often leads to problems when transactions traffic grows on a single network. Settlements may slow down and fees can rise. Such overload can be avoided by connecting several blockchains to share surplus capacity with each other. In addition, a network of connected ledgers would also reduce trading costs and would significantly minimize chances of fraud.
According to a report in Japan’s Nikkei newspaper, the two companies will initially create a mechanism that connects 7-10 domestic blockchain ledgers.
Japanese financial companies have been known as early adopters of novel technologies, including blockchain. A recent example was provided by a number of Japanese financial and technology majors, including Sumitomo Mitsui Financial Group, Inc. (TYO:8316), Sumitomo Mitsui Banking Corporation (SMBC), the Japan Research Institute (JRI), Mitsui & Co Ltd (TYO:8031), Mitsui OSK Lines Ltd (TYO:9104), Mitsui Sumitomo Insurance Company, and IBM Japan, Ltd. (President: Elly Keinan) which have agreed to start a demonstration test to verify the applicability of blockchain technology as a way to streamline and upgrade cross-border trade operations.
In their joint announcement, the companies participating in the test explained that they will input information of real trade transactions using a blockchain-based application, by which a wide variety of documents, including trade agreements and logistics/insurance documents are digitized, recorded and shared among participants. By comparing against current operations, the test aims to verify the effectiveness of blockchain technology for boosting security and cutting the time required to settle cross-border trade transactions, discrepancies among related documents and administrative costs.
With regard to its possible commercialization, the technology will be evaluated for its viability in cross-border trade business operations.