Japan – JCB and Datachain Start Demonstration Experiment to Build a “Digital Currency Exchange Platform”
JCB Co., Ltd., Japan’s only international payment brand, and Datachain has started a demonstration experiment on interoperability between different blockchains(*1) to build a “digital currency exchange platform”.
In the near future, various digital currency and circulation platforms are expected to be launched, including those issued by the private sector in addition to the Central Bank Digital Currency (CBDC). As the existing fiat currencies are widely exchanged, it is essential to develop exchange functions that enable interoperability among digital currency platforms to make use of digital currencies. For now, the most common way to exchange digital currencies is to have a third party mediate the transaction. However, given the fact that blockchain was originally designed to be “autonomous and decentralized”, it is highly likely that exchanges that do not rely on a third party will be widespread in the future.
As the first stage of the joint research, JCB and Datachain, which has expertise in interoperability technology, have been discussing the technical usefulness of a method for interoperability between different blockchains that does not rely on the trust of a third party (the Relay method *2), aiming to acquire the ability to exchange between digital currencies. Now, in collaboration with Datachain, JCB has started a demonstration experiment of interoperability between different blockchains to build a “digital currency exchange platform.”
The purpose of this demonstration experiment is to verify the technical usefulness of introducing a hub structure using IBC (*3) for interoperability between heterogeneous blockchains through the Relay method.
By combining the assets and know-how of both companies, JCB and Datachain aim to continue to create innovative services and discuss widely with companies and projects responsible for the digital currency-issuing infrastructure for the practical application of interoperability between different blockchains.
The demonstration experiment will be conducted in the following environment.
– Rather than blockchains verifying each other directly, verification will be executed between each blockchain and the exchange platform that serves as a hub, using a method that does not rely on the third-party trust by IBC.
– This Hub mechanism allows various IBC-compliant blockchains to verify each other through this hub. However, in this demonstration experiment, Hyperledger Fabric, one of the world’s most used enterprise blockchains, and Tendermint, a blockchain used by CBDC and global stable coins as a blockchain developed to connect heterogeneous distributed ledgers, will be used as the blockchain infrastructures.
– We use YUI, a Hyperledger Lab (*4), as the verification modules and IBC for communication between each blockchain and the hub.
– For cross-chain transactions (simultaneous execution of multiple transactions across blockchains), we use Cross Framework (*5).
*1 Blockchain: Information technology that allows participants to share the same ledgers and record the transfer of assets and rights without a specific administrator.
*2 YUI, a Hyperledger Lab: A project to achieve interoperability across various blockchain platforms through IBC, led by Datachain and available in OSS as Hyperledger Lab. GitHub: https://github.com/hyperledger-labs/yui-docs
*3 Cross Framework: A framework for enabling the execution of smart contracts across multiple blockchains (cross-chain smart contracts). GitHub: https://github.com/datachainlab/cross
*4 IBC: Inter-Blockchain Communication. A specification standard to ensure interoperability between blockchains, being developed by the Interchain Foundation and the Cosmos Project.
*5 Relay method: There are two interoperability methods that do not rely on a third party to mediate transactions: the “HTLC method” and the “Relay method.” The “Relay method” allows service users to automatically execute transactions without handing over their private keys to an administrator.
JCB is a major global payment brand and a leading credit card issuer and acquirer in Japan. JCB launched its card business in Japan in 1961 and began expanding worldwide in 1981. Its acceptance network includes about 36 million merchants around the world. JCB Cards are issued mainly in Asian countries and territories, with more than 140 million cardmembers. As part of its international growth strategy, JCB has formed alliances with hundreds of leading banks and financial institutions globally to increase its merchant coverage and cardmember base. As a comprehensive payment solution provider, JCB commits to providing responsive and high-quality service and products to all customers worldwide. For more information, please visit: www.global.jcb/en/
Datachain is a leading technology company that aims to create value through interoperability for blockchains. Datachain is the initial committer of YUI, a Hyperledger Lab, that enables interoperability between multiple heterogeneous blockchains via Cosmos IBC and develops Cross Framework that enables cross-chain transactions. Website: https://www.datachain.jp/