Gu Yanxi: Libra and Corda compete for the underlying operating system of digital finance


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When a digital financial ecosystem based on Libra and Corda is established, it will be difficult for a new digital financial ecosystem to appear in the market.

Original title: “The battle for operating systems in the future digital financial world has now begun”
Written by: Gu Yanxi, founder of the American Liyan Consulting Company, a researcher and practitioner in the blockchain and encrypted digital asset industry

Anyone who has experienced the development of the Internet and mobile Internet knows the importance of operating systems. In the PC era, Microsoft relied on its operating system to develop from an unknown small software company to today’s scale. In the era of mobile Internet, there were initially many operating systems, such as the operating system of BlackBerry, the operating system of Nokia mobile phones, and even Microsoft provided its own mobile operating system. But to this day, there are only two mobile operating systems, Android and IOS. All current mobile applications are developed on these two operating systems.

In the era of mobile Internet, due to the rise of open source software, mobile operating systems have also appeared in the form of open source operating systems. This is how the Android operating system was developed. Today, this open source Android system has become the main operating system for mobile applications. Such a development trend is completely different from the PC era. The PC operating system is dominated by Microsoft and Apple. The operating system is unique to the development company. But in the mobile Internet era, one of the two main operating systems is already open source. In the emerging era of digital finance, the underlying operating system, that is, distributed accounting technology, is now dominated by open source software.

Bitcoin, which prompted the emergence of distributed accounting technology, is itself open source. After that, the development of various blockchain technologies and distributed accounting technologies basically followed the open source approach. In addition, due to the characteristics of blockchain technology, only open source software can gain the trust of potential users, and financial business applications developed on it can be widely used. Therefore, the basic characteristics of the open source of distributed accounting technology are not only the natural development of software development trends, but also required by the characteristics of distributed accounting technology itself. In the current market, some frameworks that are more suitable as the underlying distributed accounting technology of the future digital financial market are open source. These frameworks include IBM’s Fabric, JP Morgan’s Quorum, R3’s Corda, and the upcoming Libra blockchain. It now appears that R3’s Corda and Libra blockchains are likely to become the underlying operating system of the digital financial world in the future.

Corda was originally designed to meet financial business and regulatory requirements. Therefore, it not only retains the advantages of blockchain technology, but also makes key changes in order to meet the needs of industry financial services, especially in terms of privacy protection and consensus mechanisms. Because Corda can meet the needs of financial institutions, it is adopted by more and more financial institutions worldwide. Various financial business applications are being developed on it. Since these applications are developed based on Corda, these digital financial products and financial business applications have very strong interoperability. Such characteristics are very beneficial to the establishment of a digital financial ecosystem on Corda.

Gu Yanxi: Libra and Corda compete for the underlying operating system of digital finance

The Libra white paper clearly stated from the very beginning that the bottom layer of its blockchain will be a simple financial market infrastructure. So far, the only digital financial products developed on top of it proposed by the Libra Association are digital stable coins. Obviously, its current focus on application scenarios is payment and transfer. But given that the Libra blockchain supports the operation of smart contracts, more types of digital financial products can be developed on top of it. In the same way, more financial business applications can also be developed. Even if the Libra Association does not develop other financial business applications, the payment transfer application alone can have a huge impact. Payment and transfer applications can help Libra build a huge user network around the world. Once such a user network is established, it is very easy to develop more financial business applications in it. Therefore, the Libra blockchain has become the underlying operating system of such a digital financial ecosystem.

When a digital financial ecology based on the Libra blockchain and Corda is established, it will be difficult for a new digital financial ecology to appear in the market. Even if the new operator has superior technical solutions and more sufficient funds, it is difficult to compete with the existing digital financial ecosystem. In the history of technology and business development, the most obvious case in this regard is IBM’s own operating system OS/2. When MSDOS and Windows have occupied the market, there is no opportunity for new operating systems. This is like the professional basketball game market in the United States. After the establishment of the NBA league, it is almost impossible to establish a new professional basketball league in the US market.