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Goldman Sachs Drops Out of R3 Blockchain Group

wsj.com

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Re: Goldman Sachs Drops Out of R3 Blockchain Group

#71

Post by daneyh »

patrickk wrote: post #59
brilliantcode wrote: post #42

Earlier quoted context omitted.

Financial companies and banks already trust each other. It doesn't make sense for them to be held under public scrutiny with a public ledger. Therefore, blockchain is a solution without a problem for financial institutions. Their needs are already well met and there's little incentive to change. It worked for a 1000+ years why uproot everything for a buzzword ? Of course they aren't going to change.

> Their needs are already well met and there's little incentive to change. This is definitely not true. It takes some financial assets 3-5 days to settle after the initial transaction goes through, weaving its way through many database systems (some many decades old) and middlemen who each take a cut, e.g. clearing houses. Any established industry has lots of cruft that builds up. For this reason Santander estimates…

That 1-5 days to settle isn't due to slow and disconnected systems though, which is what many looking from a tech perspective believe. Most financial transactions are matched in settlement systems the same day they are traded. The 3-5 days is for prefunding of underlying accounts, tear ups and other asset class idiosyncratic reasons.

Re: Goldman Sachs Drops Out of R3 Blockchain Group

#72

Post by pjc50 »

jaekwon wrote: post #30
buckie wrote: post #25

I can't say I'm all that surprised. R3 serves as both an R&D lab and a place to connect vendors and potential clients. Moreover, the focus is on private/permissioned blockchain tech. The tech in this space is still quite immature overall and pretty much everyone has had a hard time building actual blockchain infrastructure vs things that are sorta like a blockchain. If you can't show clients value for their membershi…

Kadena seems like a solid team, kudos for their work. Smart contracts require you to work in a completely new language and toolset. You don't need smart contracts to create a blockchain application, if you use the right libraries (e.g. go-merkle) and write your application to be deterministic. See Basecoin in the page below: http://tendermint.com/ecosystem If you want the benefits of Tendermint BFT consensus but w/ E…

Does anyone have a good solution for bugfixing and updating defective smart contracts yet, other than "fork the entire blockchain" Ethereum DAO passim?

If they are to be immutable then you're going to have to code to NASA standards.

Re: Goldman Sachs Drops Out of R3 Blockchain Group

#73

Post by kpil »

generalseven wrote: post #67
buckie wrote: post #25

I can't say I'm all that surprised. R3 serves as both an R&D lab and a place to connect vendors and potential clients. Moreover, the focus is on private/permissioned blockchain tech. The tech in this space is still quite immature overall and pretty much everyone has had a hard time building actual blockchain infrastructure vs things that are sorta like a blockchain. If you can't show clients value for their membershi…

If it's going to be a permissioned system anyway, wouldn't you get better performance from a non-blockchain solution? The permissioned blockchains are being called "a horseless carriage with a horse" by Andreas Antonopoulos.

True.

I think that there is no way to compete against the speed and relative non-complexity you can get from "closed group, trusted 3rd party" solutions.

There is so much hype and confusion spread around the issue - as there are some genuine threats to some of the bread-and-butter services the banks do, like accounts and payments.

But to put it mildly, the bank executives are for the most time not really in the right career to sort out what's what, and due to the way the banks work, they are not likely to listen to the people that actually know how to do that until a lot of money is wasted and very little has been gained.

Re: Goldman Sachs Drops Out of R3 Blockchain Group

#74

Post by cm2187 »

buckie wrote: post #25

I can't say I'm all that surprised. R3 serves as both an R&D lab and a place to connect vendors and potential clients. Moreover, the focus is on private/permissioned blockchain tech. The tech in this space is still quite immature overall and pretty much everyone has had a hard time building actual blockchain infrastructure vs things that are sorta like a blockchain. If you can't show clients value for their membershi…

I would be curious to understand what problems these blockchains solve. Intuitively, they do not seem like obvious candidates for financial transactions.

1. They really shine in a p2p architecture where no party trusts each other. But that's not how the financial system works. Banks trust central banks, exchanges and clearing houses, and it is very much a club where players have to be vetted and monitored by a regulator, quite far from the open and wild nature of p2p systems.

2. Market participants need anonymity. Morgan Stanley might not know who hides behind the cryptographic key xxxxx until they do a trade with Goldman Sachs, see that trade appearing in the public ledger and then suddenly they see every single transaction Goldman has done since the dawn of times. Markets need anonymity otherwise market participants can arbitrage you based on what they know you need or plan to do. And the transparency of the public ledger is a fundamental problem.

3. Regulators need transparency. The regulators will need a centralised place where they can put a name against every transaction. That I would thought almost defeats the purpose of the ledger since a traditional transaction log will have to be maintained on the side. Now you have two ledgers.

I remember this excellent blog article explaining when blockchains are pointless and unless I missed something, financial transactions do not meet conditions 3 (Absence of Trust), 4 (Disintermediation).

http://www.multichain.com/blog/2015/11/avoiding-pointless-bl...

Re: Goldman Sachs Drops Out of R3 Blockchain Group

#75

Post by Hermel »

pjc50 wrote: post #72
jaekwon wrote: post #30

Earlier quoted context omitted.

Kadena seems like a solid team, kudos for their work. Smart contracts require you to work in a completely new language and toolset. You don't need smart contracts to create a blockchain application, if you use the right libraries (e.g. go-merkle) and write your application to be deterministic. See Basecoin in the page below: http://tendermint.com/ecosystem If you want the benefits of Tendermint BFT consensus but w/ E…

Does anyone have a good solution for bugfixing and updating defective smart contracts yet, other than "fork the entire blockchain" Ethereum DAO passim? If they are to be immutable then you're going to have to code to NASA standards.

You can implement a function that migrates all of the contract's assets and data to the new version. Obviously, you need to be careful about who can call this function, maybe requiring the agreement of all (or at least a majority) of stakeholders. Also, there is a risk of hitting the gas limit, preventing you from executing a "heavy" migration.

Re: Goldman Sachs Drops Out of R3 Blockchain Group

#76

Post by lucozade »

brilliantcode wrote: post #42
wyldfire wrote: post #32

Earlier quoted context omitted.

Why doesn't the financial industry consider a public blockchain? How do big financial companies consider resolving adversity like judgments/liens/etc against an settlement based system that's an automaton?

Financial companies and banks already trust each other. It doesn't make sense for them to be held under public scrutiny with a public ledger. Therefore, blockchain is a solution without a problem for financial institutions. Their needs are already well met and there's little incentive to change. It worked for a 1000+ years why uproot everything for a buzzword ? Of course they aren't going to change.

> Financial companies and banks already trust each other

They most definitely do not, 2008 took care of that.

> It doesn't make sense for them to be held under public scrutiny

That's a matter of debate. The banks are held to, more or less, realtime scrutiny by the regulators on behalf of the public. Actually making transactions truly public would have tricky client confidentiality issues. That's why the focus has been on settlement and clearing as that's potentially more tractable.

> Therefore, blockchain is a solution without a problem for financial institutions

Possibly. The idea of a single version of the truth is very appealing to banks as a huge amount of time and effort is expended on reconciling trades, settlements etc. Whether a global transaction ordering has a use is debatable. Things like proof of work even less so.

Bear in mind, as others have said, you can take some of the features that have been applied to blockchains and use them separately. It's not a one size fits all. However, if you take away enough stuff then you often find that other technologies could be more appropriate.

> Their needs are already well met and there's little incentive to change

Not at all. No-one's really happy with the status quo. The regulators want to be sure that the banks are well risk managed. Even further, they want semi-continuous proof that it's so. The banks need to satisfy the regulators and still make money. The banks are a long way from that today.

> why uproot everything for a buzzword

They may well not but you underestimate the ability of senior folk in big organisations to get distracted by the shiny, shiny. Banks are no exception, they are just as susceptible to fads as anyone.

On the positive side, they are surprisingly good at accepting experimental technology. They've been early adopters of relational DBs, XML, Java, Smalltalk, Haskell, OCaml, object DBs, FPGAs etc etc. Of course, they're also one of the biggest users of COBOL so it's swings and roundabouts.

Re: Goldman Sachs Drops Out of R3 Blockchain Group

#77

Post by davidgerard »

cm2187 wrote: post #74
buckie wrote: post #25

I can't say I'm all that surprised. R3 serves as both an R&D lab and a place to connect vendors and potential clients. Moreover, the focus is on private/permissioned blockchain tech. The tech in this space is still quite immature overall and pretty much everyone has had a hard time building actual blockchain infrastructure vs things that are sorta like a blockchain. If you can't show clients value for their membershi…

I would be curious to understand what problems these blockchains solve. Intuitively, they do not seem like obvious candidates for financial transactions. 1. They really shine in a p2p architecture where no party trusts each other. But that's not how the financial system works. Banks trust central banks, exchanges and clearing houses, and it is very much a club where players have to be vetted and monitored by a regula…

> I would be curious to understand what problems these blockchains solve.

Buzzword compliance. I predict you will see "Blockchain" products that contain transactions in a Merkle tree as the only technological link to actual blockchains. (R3 have one already, R3 Corda.)

Re: Goldman Sachs Drops Out of R3 Blockchain Group

#78

Post by century19 »

alblue wrote: post #56
brilliantcode wrote: post #42

Earlier quoted context omitted.

Financial companies and banks already trust each other. It doesn't make sense for them to be held under public scrutiny with a public ledger. Therefore, blockchain is a solution without a problem for financial institutions. Their needs are already well met and there's little incentive to change. It worked for a 1000+ years why uproot everything for a buzzword ? Of course they aren't going to change.

Actually modern finance has its roots in the coffee houses of London, circa 1650. http://www.history.co.uk/study-topics/history-of-london/lond... These were the meeting places in which the maritime insurance deals were made at a time of increasing maritime exploration by the British. These also evolved to be the places such materials were bought and sold - and in fact the trading pits were (and in some cases are) bas…

I'm not sure accurate this is. Paper money and the first stock exchange came from Amsterdam. A lot of the words, like Bank (board where the money was counted, breaking the bank meant breaking the board), nostro Account, vostro Account came from Latin/Italian.

Re: Goldman Sachs Drops Out of R3 Blockchain Group

#79

Post by desult »

polack wrote: post #10
gregoryrueda wrote: post #8

Is this so they can build their own Blockchain?

The other members was not happy when they found out that GS applied for patents that could affect R3. My guess is that GS thinks they will make more money on their own when they built up a nice patent portfolio in this space.

What patents? I just tried to find in the USPTO and nothing came up. Do you have a link?

Re: Goldman Sachs Drops Out of R3 Blockchain Group

#80

Post by m3ta »

buckie wrote: post #25

I can't say I'm all that surprised. R3 serves as both an R&D lab and a place to connect vendors and potential clients. Moreover, the focus is on private/permissioned blockchain tech. The tech in this space is still quite immature overall and pretty much everyone has had a hard time building actual blockchain infrastructure vs things that are sorta like a blockchain. If you can't show clients value for their membershi…

> - Signed Transactions (TLS based authentication trades security & audibility for speed)

I think you meant "auditability".

How are "Signed Transactions" an upgrade from TLS 1.2? How is TLS trading security for speed?

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