Japan's JCB to connect multiple blockchains
Congestion can slow down transactions and raise costs
TOKYO -- Japanese credit card company JCB is developing a technology that connects separate blockchains to share their excess capacity, resolving issues that arise from heavy traffic on a single ledger.
The system will be jointly developed with Tokyo-based fintech venture CurrencyPort. The partners will initially create a mechanism that connects about seven to 10 domestic blockchain ledgers.
Virtual currencies like bitcoin and Ethereum record transactions on an open, distributed ledger known as a blockchain. Fraud is considered impossible, since information is shared among all participants. But each blockchain has a limited capacity, creating problems when the volume of transactions surges on a single network. Settlements may slow down and fees can get more expensive, among other issues.
Such congestion can be alleviated by connecting several blockchains to share surplus capacity with each other. A network of connected ledgers would also allow different virtual currencies to be traded without an exchange and reduce trading costs.
JCB aims to spread connectable blockchains by opening the use of the technology to other companies. The company is still unsure about how such a system will be applied, but hopes to build know-how and improve convenience.