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IBM and Linux Foundation To Create Blockchain For Major Financial Institutions (thestack.com)
An anonymous reader writes: Following initial news of the project in March, IBM, under the supervision of the Linux Foundation and in partnership with several major tech interests including Fujitsu, has announced today that it will lead development of a new blockchain — a financial transaction ledger fashioned after the Bitcoin model. Provisionally called Open Ledger, the new initiative is aimed specifically at financial transactions, and though it will be open source in terms of development, but 'semi-private' in operation. Those with an interest in the project are said to include JP Morgan, Wells Fargo and the Bank of England. IBM VP Jerry Cuomo, who has discussed the project with Fortune and Wired, commented "The current blockchain is a great design pattern...Now, how do we make that real for business? What are the key attributes needed to make that happen? That's what this organization is about."
Bitcoin is already real for business. This blockchain project will fail, people don't want banks in control of money, which is one of the reasons bitcoin was created in the first place.
Think of the children!
Isn't the incentive for burning CPU for blockchain verification that you get to claim the transaction fees in BTC? And isn't a large element of its strength the fact that you need relatively crazy amounts of hardware plus consensus from multiple sources to build it, thus making forgery intractable?
How do you incentivize enough CPU power & players into a "semi-private in operation" system? Why do established big players want to mess around with this when they're already getting pretty serious transactions fees doing it the old fashioned, closed everything way?
I know. They h8 us.
And hate is what is driving their kind to shove Bitcoin down our throats.
For them, logic doesn't exist. Only profit.
Could there be purposes other than financial for blockchains? It seems it's a great signing/verification method.
It's not the blockchain. "Eternal logfiles" have been around for much longer than Bitcoin. The innovation is how the Bitcoin system agrees on the right blockchain without giving a central institution control over the blockchain.
This isn't a cryptocurrency. It's a securely signed ledger for the transactions the banks are already doing. Many times each day, Wells Fargo sends money to Bank of America, BOA borrows from Chase, Chase pays back a loan from Barclays, Barclays pays Wells Fargo (completing the circle) , etc. There's a lot of paper work, computer processing, and transaction costs and delays in moving that money around the circle. A block chain might, in some cases, might be a more efficient or effective way to record some of those transactions rather than the current computer system.
> people don't want banks in control of money
The line at the bank, the people standing there waiting to hand their money to the bank, suggests otherwise. Regardless, this article is about the banks using a blockchain to record transactions among themselves . Surely the banks want the banks to be in control of their own monetary transactions.
I hope they remember to put a back door in. For security.
The internet started to get popular, but Big Money didn't like the lack of control or some of the shadier practices that went on there.
So America OnLine (among others) was created, and aggressively sold to consumers. And it provided "internet". Sort of. It was a very walled garden. But you did start seeing "AOL Keyword: MOVIE TITLE" and such in advertising and on TV. In the long term, how well did that work out?
Yes, AOL still (technically) exists, but it is not the walled garden it used to be. It's now a pretty standard (if large) ISP. Providing access to the big, bad internet it was meant to replace.
s/Internet/Private Blockchain/g
I should clarify transactions between big banks is ONE example. The same toolset can be used for other blockchains, to keep track of whatever you want.
Another example might be medical residencies. All of the hospitals want the top graduates. The top graduates won't accept a residency at a crappy hospital, and a top hospital like Mayo clinic won't accept a graduate with a low GPA. It gets complicated. Kind of like the NFL draft except with a lot more people, and graduates (theoretically) have more choice than NFL draftees. The medical schools and hospitals could use a blockchain to keep track of which hospitals get which graduates.
Today, this step is often done by clearing houses. This is really about removing that middle-man, and reducing costs for the banks.
They are making it Semi-Private to cover up mistakes that already exist in their eco-system.
Tell me again what is going to keep them from just plunging on "one more mistake"?
Look I don't think people should be shamed, but if you don't add cleanliness from the start then you'll never reach that point. Just start a new set of banks, it's not our work to fix your mistakes.
> people don't want banks in control of money
The line at the bank, the people standing there waiting to hand their money to the bank, suggests otherwise.
This logic is hilarious. Banks and credit unions are the only institutions where you can perform a wide array of activities.
Intelligent people understand that regulation of money (and banks) is a good thing. People are pissed off that there's not enough regulation on banks to protect ordinary people (example: bank of america re-arranging activity in order to charge you the maximum penalty for overdraft. example: financial collapse caused by greedy bank policies. Many, many more examples are available.)
http://www.bloomberg.com/news/articles/2015-07-23/nasdaq-expects-to-be-first-exchange-to-use-bitcoin-technology
Sure, if you think that fascists are intelligent.
And "intelligent people" like you are the cause of this: the reason we have to stay with crappy banks like Bank of America is because creating competition is too hard and costly given all the banking regulations. And BofA loves that they can get away with this crap because they know that people like you have taken away our choice to switch somewhere else.
If banks want it, it's bad. By watching the financial news for the past decade I have come to the conclusion that most bank executives are essentially felons that have been caught multiple times with their hands in the cookie jar, but the "justice department" decided (under pressure from the white house) not to prosecute them for their crimes (sub-prime mortgages, forging signatures on foreclosure documents, inappropriate use of TARP funds for executive parties, high frequency trading shenanigans, almost bankrupting their banks while taking millions of dollars in bonuses, secret hidden fees and other unethical business practices, the list goes on and on). So if the banks are after something to replace traditional record-keeping, they are probably after something easily forgeable to help hide their business practices from Federal regulators.
I'm sure IBM will find a way to use Sametime as base for this!
A cartel of blockchain-utilising financial institutions, controlling enough computing power to cover >50% of the mining network, would gain some level of power/control over the network that would allow them to mess with transactions to a limited degree:
https://en.bitcoin.it/wiki/Weaknesses#Attacker_has_a_lot_of_computing_power
> there's not enough regulation on banks to protect ordinary people (example: bank of america re-arranging activity in order to charge you the maximum penalty for overdraft
I guess you're glad BOA hasn't done that in years, they process them in timestamp order - because competition.
TRANSLATION: "The current blockchain is a great design pattern...Now, how do we make that *EXCLUSIVE* for *OUR* business? What are the key attributes needed to make that happen? That's what *CONTROL* is about."
So if it's semi-private, it probably means regular people won't be able to mine, which means that corrupted banks will try to take over
No, that is not what this is about. This is not a takeover of bitcoin by the banks. This is about using a separate semi-private blockchain to verify non-bitcoin transactions. Currently, financial transactions, such as stock or bond sales, can take several days to clear, and involve significant transaction costs. By using a blockchain, these transactions could be verified in seconds, and at lower cost.
Financial transactions don't take several days to clear because they're hard to verify. They take several days to clear because (1) it slows down day trading, especially by people without large capital reserves, and (2) for some transactions, because it lets banks hold onto your money and make interest off them in the meantime. Put another way, they're slow because somebody prefers it that way.
This is so like the Internet in 1995. Then we had Compuserve, AOL and MSN (yes, the Microsoft Network was a competitor to the Internet) all declaring that the Internet was a neat academic toy and demonstrated the principles nicely, but now the grown-ups would build a real network, with proper management controls and billing systems, so that all the consumers could enjoy proper corporate service with brands that they could trust.
It didn't end well for them.
I guess you're glad BOA hasn't done that in years, they process them in timestamp order - because competition.
They only did that after the regulations changed to require them to use a neutral order.
First, F you for making me defend BOA in order to state the truth. They are assholes. Credit unions are much better.
I really don't like pointing out that:
No regulation required that they not process transactions in whatever order they chose. BOA changed to a more fair process without being forced to.
IF they hadn't changed chosen to change that themselves, it is likely that there WOULD have been regulation requiring a change. But in fact they changed it without any regulation requiring them to do so. I think later on in some states at least a regulation was passed.
PS: BOA does suck. Credit unions, which are owned by their customers, are much better.
The telegraph is obsolete, but banks still use the systems built upon it as if communications were still being typed out by a telegraph operator. Sure, there are "Real time gross settlement" wire systems (still early 80's tech), but banks won't transfer your money that way, just theirs. Why should Automated Clearing Houses (ACH) still exist when technology made them obsolete in the 90's? Why can Wall Street traders buy and sell a billion dollars worth of stock in under a second, but if my mother tells her bank to send me Christmas money, it'll arrive in the form of a check, in the mail, five business days after the transfer was initiated?