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IBM Reported To Be Developing Blockchain-Based Currency Transaction System

Posted by Soulskill on from the mining-your-own-business dept.

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.

15 of 78 comments (clear)

  1. This is some serious sci-fi drama by Anonymous Coward · · Score: 2, Interesting

    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.

    1. Re:This is some serious sci-fi drama by Anonymous Coward · · Score: 2, Informative

      1) No evidence that the discoverer of Bitcoin is a genius;

      2) No evidence that a single discoverer of Bitcoin even exists - it's as likely to be the product of or under the early auspices of a government agency;

      2b) Either way, such agencies will have already spent much longer looking for flaws than any other organisation;

      3) The technology underlying Bitcoin is hardly novel;

      4) It's one proposed component of one technology used to record financial transactions. To suggest it will "underpin major parts of the world economy" is like suggesting that coffee "underpins" major parts of the world economy because the programmers who work for banks drink coffee.

      (ok ok coffee does underpin the modern economy)

  2. Sorry bitcoin fanboys... by Viol8 · · Score: 2, Insightful

    ... 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.

    1. Re:Sorry bitcoin fanboys... by Chris+Mattern · · Score: 2

      Well, if it's families, it's okay. Everybody's got a family.

  3. Re:Uh... by Viol8 · · Score: 2

    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.

  4. IBM Mints Money by Calsar · · Score: 2, Funny

    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!

  5. STOP SAYING BLOCKCHAIN by o_ferguson · · Score: 2

    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.
    1. Re:STOP SAYING BLOCKCHAIN by o_ferguson · · Score: 2

      Not if you say it too often.

      --
      - In Soviet Korea, only old people loose all their bases to Natalie Portman's petrified hot grits overlords.
  6. Re:Uh... by nanoflower · · Score: 2

    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.

  7. Conversation went roughly like... by smallfries · · Score: 3, Insightful

    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.

    --
    Slashdot: where don knuth is an idiot because he cant grasp the awesome power of php
    1. Re:Conversation went roughly like... by JesseMcDonald · · Score: 4, Insightful

      Instead the community glommed onto a rather flawed version based on artificial scarcity...

      Scarcity is a fundamental requirement for any currency. It's either natural due to physical scarcity, as in gold, or artificial, as in bitcoin or US dollars or most other currencies in common use. Any digital currency will have the property of artificial scarcity, because information is not naturally scarce. Ensuring that scarcity is maintained without reliance on a central authority is what the blockchain is all about. The only significant difference in the form of scarcity between bitcoins and dollars is that one is governed by a fixed and unbiased mathematical formula, while the other is dictated by politics and thus unpredictable and subject to corruption.

      You can complain all you like about "unfairly" enriched early adopters, but I for one would much rather have that than unfair enrichment based on one's political connections. When bitcoins come into existence they're distributed by a scrupulously fair lottery with proportional odds to people doing useful work for the network. When dollars are produced they benefit first with the authority to order them, and then those who decide how they're distributed, then finally the banks and government contractors and employees who get a chance to spend them before prices adjust to the increased supply; at each stage there is plenty of scope for self-enrichment through manipulation of the flow of new money.

      Anyway, if you really want to trade traditional currencies online (as credit—the closest you're likely to get to trading the actual currencies), the reference client and server for Ripple are open source under the ISC License. Such a system can't be completely distributed, of course, since it's tied to external centralized currencies, so it's no substitute for Bitcoin; Ripple solves a different, and easier, problem by dealing in loans rather than assets, leaving it up to the users to decide how much credit to extend.

      --
      "The state is that great fiction by which everyone tries to live at the expense of everyone else." - Bastiat
  8. Re:Uh... by itzly · · Score: 2

    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.

  9. This is good by beernutmark · · Score: 2, Insightful

    for bitcoin.

  10. Re:Uh... by TheCastro1689 · · Score: 2

    Of course, it's the same reason they're basically outlawing cash. And why I keep moving more and more towards only using cash.

  11. How long will it take IBM to find it won't work? by Baron_Yam · · Score: 3, Insightful

    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.