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IBM Reported To Be Developing Blockchain-Based Currency Transaction System
An anonymous reader writes: According to a Reuters source, IBM is working with the U.S. Federal Reserve and other central banks to develop a digital currency transaction system using the same blockchain technology that underpins Bitcoin — but which will deal with existing national currencies. The anonymous source says: "These coins will be part of the money supply...It's the same money, just not a dollar bill with a serial number on it, but a token that sits on this blockchain," Despite vocal community protest about the potential "co-opting" of a geographically-neutral cryptocurrency in favor of a centrally-controlled distributed transaction ledger, the IBM project, if true, is only one among hundreds seeking to leverage the blockchain for new transaction systems.
The technology invented by a still anonymous genius, being developed to underpin major parts of the world economy. All that's left is to reveal that he is a sinister mastermind and the blockchain has a critical weakness that lets him, and him alone, control any transaction.
Gives me shivers. The future has arrived.
... but if you don't like governments monopolising money supplies you can hardly turn around and insist that only bitcoin can monopolise the use of the block chain algorithm. Freedom is a 2 way street.
Bitcoin mining is only possible because it was designed that way. If you don't build this into the currency then you can't do it and any virtual coins you do manage to "mint" will simply been see as counterfeit. You can gaurantee that any government central bank using these will keep a central list to verify against - it won't just be in the block chain.
How are they going to get past the part that we TRUST the Feds to give us an electronic wallet without backdoors?
Step 1: Someone develops a cool open source technology
Step 2: IBM slaps their name on it
Step 3: IBM sells it to the government for millions of dollars
Step 4: Profit!
Call it what is - a distributed ledger.
- In Soviet Korea, only old people loose all their bases to Natalie Portman's petrified hot grits overlords.
Won't this make it easier to track the money? That would seem to be one reason that the US govt. would want to back this idea.
Government: We really like the idea of being able to watch every currency transaction in real time...
IBM: We can sell you a bitcoin system.
Government: We don't really like terrorist money, or people mining free cash...
IBM: We can sell you an IBMcoin system. Please fill in the details on this rather large cheque.
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The current financial system requires anybody who wants to exchange funds to go through a mutually trusted third party (a bank, a credit card company, a wire transfer service) who will then take a percentage of the transaction off the top. If you can cut that middleman out of the system you will save everybody a ton of money.
What is the purpose of introducing any new transaction system (other than being the owner of it and collecting transaction fees and BIG DATA):
- Is it faster? Most existing transaction systems are already fast (at least as fast as BTC transactions)
- Is it cheaper? This allows you to lower transaction fees, and makes microtransactions possible
- Does it have a lower barrier to entry for small time merchants? This is where existing systems often fall short. PayPal is not too bad (it's bad for other reasons), and there are other payment processors available accepting credit cards and whatnot, but registering to receive payments yourself remains a PITA.
- Is it easy to use? Existing systems (Paypal, iDeal) and payment processors are already getting quite good at integrating well into the sales process.
- Can it do offline transactions securely? I don't think BTC can do this... For a time, offline transactions were seen as important by our banks, and they added an electronic wallet to our bank cards for small transactions at market stalls, parking meters and the like. However that thinking has been overtaken by events; adding a payment terminal and internet connection to anything has become so cheap that most places just have mobile connected terminals instead of offline ones.
BTC was set up as anonymous and decentralized, but for the likes of IBM, I fail to see what the attraction of that would be. So indeed... why are they doing this?
If construction was anything like programming, an incorrectly fitted lock would bring down the entire building...
Combine the downsides of fiat money (unlimited printing by inner cabal) with the downsides of bitcoin (Everyone can see your transactions)
No, Actually how about you stay the hell away from me with this rubbish.
Bitcoin still has a middleman. Somebody has to put the transaction in a block and find a good hash for it. That takes energy, and they would like to be paid for it.
In fact, for small transactions (less than $1) bitcoin is rather expensive.
for bitcoin.
Ok l I know this is an unlikely scenario, but my main concern is that cash no longer becomes physical and can literally magically disappear if there was a global EMP that goes off, eg that Revolution tv series.
Paypal is rather expensive. But I can do bank transfers for free. And banks are now starting with contactless NFC payments, also free.
I don't see why "the community" would be upset about IBM developing a Blockchain-based system of their own to sell to governments. Did they really think the idea would never be used by anybody but crypto-anarchists?
And I thought that under the crypto-anarchist ethos, people were free to seek profit in any means they saw fit. Does that somehow not apply to large companies?
Of course, it's the same reason they're basically outlawing cash. And why I keep moving more and more towards only using cash.
Unless they've figured out blockchain trimming, and how to vastly increase the transaction rate to traffic ratio, the blockchain simply isn't viable.
There's a reason all those 3rd party Bitcoin intermediaries popped up for 'off-chain' transactions (that solve all of Bitcoin's problems by removing Bitcoin from the equation).
While there may be some Bitcoin enthusiasts at IBM, it won't take very long for the rest of the organization to figure out the technology doesn't scale, isn't efficient, and has a short practical lifespan.
Compare to Google Wallet for things like transferring money between users. Google does this for free (for now), Paypal charges 10%. Why anyone would seek that as a payment method at this point is mind numbing.
Agent K: A *person* is smart. People are dumb, stupid, panicky animals, and you know it.
So true. If this takes off, I can see it as a way to achieve microtransactions, but if a few billion people suddenly start using it to send 1p to each other every time they read a newspaper article or whatnot, then I can see that blockchain becoming as large as all the computer storage in the entire world in short order.
It has to be trimmed in order to be practical, and I'm not sure how practical it would be without the blockchain. I wouldn't worry too much about the transaction speed, visa and mastercard happily handle a lot of transactions so this can be handled too (even if they need a better system than the current one).
Of course, it's the same reason they're basically outlawing cash.
Ummm...citation?
Off the chain transactions are not a bad thing. They do solve to a large degree the problem of dust transactions.
Sure, they are not "official" and rely on a third party that may or may not be trustworthy, but the thing is... at any time you have the option to withdraw them and thus commit them to the blockchain.
There will be scams and people will risk losing money but in the end, legitimate organizations will prevail.
Another thing is that other coins with different blockchains also exist. You can use those to make smalller transactions. There does not need to be only one (blockchain) in the end. Some will be ideal for smaller transactions. Bitcoin will never be that. It will be the one to store value instead.
That said, I think the current blockchain technology is getting improved anyway. Something about more transactions per block or bigger transactions or something similar to reduce the current issues
Only allow one sided transactions that create new tokens to be signed by the reserve bank's key. Partition transactions into separate chains based on transaction hash. Validate the "official" blockchain in large data centers. Offer API access to submit or verify transactions without fetching the entire chain.
It really shouldn't be difficult to design the basic software changes to the bitcoin client. Scaling across a data center might be a bit more work though.
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