Microsoft recently partnered with the R3 banking consortium to further build out its tools powered by blockchain, one of the backend technologies behind Bitcoin.

Image: Microsoft

On Monday, at the Microsoft Envision conference in New Orleans, Microsoft announced a partnership with the R3 banking consortium to help further develop its blockchain-as-a-service offerings.

For the unfamiliar, blockchain is the foundational technology behind the encrypted digital currency known as Bitcoin. Think of blockchain as a master ledger, or database, that stores data on the transactions around a digital asset (like the cryptocurrency Bitcoin). Basically, it helps people track ownership of these assets and any time they formally changed hands.

SEE: Encryption Policy template (Tech Pro Research)

Microsoft got its big start in blockchain back in late 2015, when it partnered up with ConsenSys to bring the Ethereum Blockchain as a Service (EBaaS) to Microsoft Azure. The EBaaS gave enterprise users a ready-made environment where their developers could experiment in building with blockchain.

This is where R3 comes in. R3 is a consortium of more than 40 banking institutions that work together to develop new tools with ledger technologies like blockchain. It also gets banks connected with existing platforms, like Ethereum. In fact, Microsoft worked with R3 back in January 2016 to get 11 banks on board with the technology.

With this new partnership, institutions that are a part of R3 will get access to the Azure platform and Microsoft's network of blockchain solution providers. Microsoft, in turn, gets new customers and an expanded ecosystem including working with the people working on blockchain solutions in R3's labs. This could potentially bring a bigger, better blockchain product to market, or simply help bring existing solutions to market faster.

Every industry has its own set of leading disruptors. For the financial services industry, blockchain is at the top of the list. Lauded for its security and transparency, blockchain has the potential to bring major change to traditional financial and banking processes.

One example, as noted in Microsoft's original press release, would be to speed the trade of stocks or bonds. According to the release, blockchain could potentially make these trades happen in minutes, instead of days, and with extra protection from fraud.

Microsoft currently has a few different offerings for blockchain, including a C++ client and one working with Ubuntu. With this new partnership, we are likely to see more options soon.

However, Microsoft is not the only company embracing blockchain. In February 2016, IBM announced new initiatives in blockchain-as-a-service for developers, specifically geared toward the enterprise.

SEE: Can IBM bring Bitcoin's blockchain technology to mainstream business? (TechRepublic)

IBM announced it was contributing code to the Linux Foundation's Hyperledger Project, as well as opening up IBM Garages in Tokyo, New York, London, and Singapore to help support developers who were building products with blockchain on its cloud platform, Bluemix. IBM also revealed that it was partnering with organizations like the London Stock Exchange Group to further investigate blockchain.

Right now, Microsoft and IBM are the two front-runners in providing this blockchain-as-a-service. The strength of their partner organizations will undoubtedly play a role in the success of their respective initiatives, but the true winner will be the first to take blockchain from an innovative sideline project to a foundational business tool.

The 3 big takeaways for TechRepublic readers

Microsoft is partnering with the R3 banking consortium to further the use of blockchain technology. R3 has been working with blockchain and similar technologies since 2015, and will act as a strategic partner. R3 members get access to Microsoft Azure and Microsoft's network of solution providers. Microsoft will work with the R3 labs to develop more blockchain services. Microsoft's biggest competitor in the space, so far, is IBM, which announced its blockchain-as-a-service earlier in 2016. Strong partners will be essential, but the winner will be whichever company creates the first mainline business tool with blockchain.

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