According to a recent report, R3, the private blockchain initiative backed by several major companies—including Intel, Bank of America, and Wells Fargo—has been exploring various strategic options, including a potential sale. Sources familiar with the matter said that blockchain organizations such as Ava Labs and the Solana Foundation have been approached about a possible acquisition. This development marks a symbolic end to the era when traditional financial institutions believed private blockchains would overshadow public networks like Bitcoin.
The Rise and Fall of Private Blockchains
Founded in 2014, R3 initially attracted support from over 40 financial giants, including HSBC, Barclays, SBI Group, Temasek, and UBS Group AG. The consortium raised more than $100 million from these backers, transitioning from a research group into a product company. Banks, wary of Bitcoin’s permissionless and open design, saw private blockchains as a way to harness similar efficiencies while maintaining control over participants and regulatory compliance.
However, this approach quickly encountered major roadblocks. Private blockchains created isolated ecosystems with limited interoperability, and the governance complexity between competing banks became a significant hurdle. Many proposed use cases could have been handled by traditional databases, and the effort required to implement blockchain technology often outweighed the benefits in these closed networks.
Mikko Ohtamaa, co-founder of tradingstrategy.ai, summed up the issue: “The whole private blockchain was an oxymoron in the first place. The business benefits of public blockchains come from open source (no license fees), open access (no API costs), and open transact (no third-party contracts for moving assets). R3 had none of these.”
From Corda to Conclave: A Technical Journey
R3 brought on former Bitcoin developer Mike Hearn, who played a pivotal role in shaping Corda—R3’s blockchain-inspired distributed ledger designed for the financial sector. Hearn also contributed to Conclave, R3’s confidential computing solution. However, in February 2021, Hearn stepped away from his full-time role, marking a turning point. Now, with a potential sale looming, R3 faces the financial consequences of trying to mold blockchain to fit traditional finance (TradFi) requirements.
According to Bloomberg, R3 has been weighing options for selling the company over the past six months, including joint ventures, a minority stake sale, or a full sale. Ava Labs (the team behind Avalanche) and the Solana Foundation have been reportedly approached, signaling that public blockchain ecosystems see potential value in R3’s legacy assets or talent.
The Lesson for Traditional Finance
The R3 saga echoes the 1990s when companies favored private intranets over the public internet—before realizing the immense power of open systems. Public blockchains benefit from global collaboration and permissionless innovation, which consortium-based private networks cannot replicate. Banks eventually understood this and left R3’s consortium in droves.
Ultimately, the market’s preference for public blockchain solutions over private ones has been proven once again. R3’s potential sale serves as a cautionary tale: trying to separate blockchain technology from its most valuable features—openness, decentralization, and network effects—leads to a dead end.