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Tech and Banking Giants Ditch Bitcoin for Their Own Blockchain

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Re: Tech and Banking Giants Ditch Bitcoin for Their Own Blockchain

#31

Post by l3m0ndr0p »

malandrew wrote: post #16
macns wrote: post #13

Reading the participants' comments below the announcement, most of them speak of an open/distributed ledger, not Bitcoin's blockchain. So it seems they really are ditching the original blockchain. IBM intends to contribute tens of thousands of lines of its existing codebase and its corresponding intellectual property to this open source community. Digital Asset is contributing the Hyperledger mark, which will be used…

"enterprise grade code" What does that even mean? I read that and think to myself "cowboy generated spaghetti code with more bugs and more technical debt".

Outsourced

Re: Tech and Banking Giants Ditch Bitcoin for Their Own Blockchain

#32

Post by roymurdock »

For anyone who needs a (very simplified) primer on the blockchain and why it's relevant for banks:

A blockchain is a ledger (piece of paper that records transactions) with perfect memory of every single transaction that has ever occurred within a certain network. This makes double spending within the network impossible as you can trace every single coin in the network back to its origin, verifying that your trading partner does, in fact, have the coin he claims to. This removes the need for a trusted third party to oversee/verify transactions.

This is important for banks because currently they pay a 3rd party clearing house to process transactions and transfers between them. They cannot trust each other because their transactions are not linked together in one shared network.

If they all agree to get on a shared blockchain (ledger), they can split the costs of continuously verifying the validity of the blockchain (leder) between them, rather than paying a 3rd party for the same service. This would reduce fees within the industry and reduce time between transfers.

I used to be very excited about blockchain technology and its implications for creating micro/private currency networks. Something about the financial industry's interest has really turned me off the blockchain and its possible implementations.

Re: Tech and Banking Giants Ditch Bitcoin for Their Own Blockchain

#33

Post by johndevor »

roymurdock wrote: post #32

For anyone who needs a (very simplified) primer on the blockchain and why it's relevant for banks: A blockchain is a ledger (piece of paper that records transactions) with perfect memory of every single transaction that has ever occurred within a certain network. This makes double spending within the network impossible as you can trace every single coin in the network back to its origin, verifying that your trading p…

> Something about the financial industry's interest has really turned me off the blockchain and its possible implementations.

What exactly? And don't you think banks will be more apt to use Bitcoin once things like the lightning network roll out (offering much greater transaction volumes)?

Re: Tech and Banking Giants Ditch Bitcoin for Their Own Blockchain

#34

Post by jsprogrammer »

logfromblammo wrote: post #11

"Ditching" Bitcoin? Wouldn't that imply that they had previously adopted Bitcoin to some meaningful extent? Bitcoin is merely proof of concept for the underlying technology. I expect that there will be many more offshoots in the future, beyond the pieces used by the existing banking system. But I won't really care about any of them, until one of them allows me to work, buy, and sell without being forced to trust any…

I don't see what advantage an offshoot would have. The current blockchain is the longest; there's no reason to ditch it.

Re: Tech and Banking Giants Ditch Bitcoin for Their Own Blockchain

#35

Post by Hermel »

roymurdock wrote: post #32

For anyone who needs a (very simplified) primer on the blockchain and why it's relevant for banks: A blockchain is a ledger (piece of paper that records transactions) with perfect memory of every single transaction that has ever occurred within a certain network. This makes double spending within the network impossible as you can trace every single coin in the network back to its origin, verifying that your trading p…

Note that in practice, this 3rd party clearing house often is owned by the banks (as joinz venture), reducing your implied incentive to obsolete them.

Re: Tech and Banking Giants Ditch Bitcoin for Their Own Blockchain

#36

Post by roymurdock »

johndevor wrote: post #33
roymurdock wrote: post #32

For anyone who needs a (very simplified) primer on the blockchain and why it's relevant for banks: A blockchain is a ledger (piece of paper that records transactions) with perfect memory of every single transaction that has ever occurred within a certain network. This makes double spending within the network impossible as you can trace every single coin in the network back to its origin, verifying that your trading p…

> Something about the financial industry's interest has really turned me off the blockchain and its possible implementations. What exactly? And don't you think banks will be more apt to use Bitcoin once things like the lightning network roll out (offering much greater transaction volumes)?

I think I was turned off because I envisioned a much grander future for blockchain tech than a glorified clearinghouse for big banks.

Banks will never use a public network (like Bitcoin) to manage inter-bank transfers. They'll take the underlying technology and create a custom, private network where they can tweak protocols to their liking.

The hard part will be for the banks to form a board to oversee the network, because they'll each have to contribute members and those members will have to work together and trust each other not to make sneaky or unfavorable changes to the underlying codebase of the private network. There will be lots of politics based on relative bank size and power within the network. Should be interesting to see how it plays out.

Re: Tech and Banking Giants Ditch Bitcoin for Their Own Blockchain

#38

Post by stymaar »

paulhodge wrote: post #23
DennisP wrote: post #19

It makes sense for the banks to do this, because they have different requirements. Bitcoin is great because it works with an unknown set of untrusted entities, and there's no counterparty risk because the ledger is the currency. Banks have a known set of semi-trusted entities, and want to track off-chain assets. They'll still have counterparty risk, but if they see a way to use chained blocks and something like Byzan…

Yup. The actors don't even need to trust each other that much, because they each still need to use their public key to execute a transation. The level of trust is just that everyone will play nicely, such as not purposefully ignoring transactions. The Bitcoin model is good at incentivizing actors to play nicely. Banks have no need to create this incentive, it's already in their interest. The Bitcoin mining system als…

> The Bitcoin mining system also solves another problem: how to evenly distribute new money in a fair way.

That is not the problem that mining is addressing. Mining is an incentive for people spending resources to check the integrity of the blockchain.

This has nothing to do with «fairness».

Re: Tech and Banking Giants Ditch Bitcoin for Their Own Blockchain

#39

Post by stymaar »

SoyNut wrote: post #18

entrepreneur: "About your open blockchain project, sir." IBM PR correspondent: "Yes, what about?" entrepreneur: "Well, it's closed source. I don't see public repositories anywhere for it." IBM PR correspondent: "No it's not closed source! It's just not available to you or anyone who doesn't have access to our network. Just ask our business partners if it's open." The Linux Foundation: "Of course it's open! Open to US…

Richard Stallman approves ;)
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