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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."
This isn't electronic money, it's a ledger and transaction system. Not the same thing at all. Instead of a "cash" value, you could be trading a stock, a commodity, etc.
Securities clearing - the process of making sure that when you click the button to buy something, you get it, and the person who sold it to you no longer has it, without either of you having to care about each other's creditworthiness, nor even your respective brokers' respective creditworthinesses - is really, really, complicated. And slow (days, batch-processing taking place overnight.) And expensive. Its procedures date back almost a century, to the days when everything was done on physical share certificates with numbers on them and handwritten signatures.
http://www.bloombergview.com/articles/2015-07-14/banks-forgot-who-was-supposed-to-own-dell-shares
And it still sometimes breaks.
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.
1- Bitcoin transactions can take hours to complete
My bank's online billpay can take up to three days to complete. Sending a check out of state can take well over two weeks to arrive and fully clear.
2- [...] people will "bribe" the system by enclosing a transaction fee into their transaction.
I can enter a stock order at a host of retail brokerages for under $10; or, I can pay biiig bucks to have a sub-millisecond line right to the exchange.
3- Everyone who touches this stuff seems to turn into some kind of thief.
First of all, massive selection bias there. And second, welcome to every unregulated item of value ever created. Until some regulatory authority steps in to protect the weak and the stupid, some people just can't seem to throw their money at the criminals fast enough. "Here, stranger, hold this money for me while I look the other way for a few days".
4- The people sound absolutely insane.
I can send money to foreign friends without paying foreign exchange or wire transfer fees. Wow. Lock me in a padded room. I can pay for goods and services online semi-anonymously. Pass the antipsychotics. Again - Selection bias. You've chosen to only hear the crazies over the people just using it in mundane day-to-day transactions.
5- The whole thing is shrouded in ludicrous amounts of secrecy.
And the Federal Reserve won't open its books to outside auditors because?
this is very volatile and backed by nothing except scarcity.
"Scarcity" means it has more backing than every world government issued currency.
It exists solely because there's no good way to transfer money anonymously without meeting in person- literally any government in the world could tank the price by offering a way to transfer their currency anonymously.
And I agree, with the only substantially-true statement you've made. Except, no government will ever offer that as an option (without having a backdoor), making it not much of a threat.
ACH:
Cheap
slow
US only. (The Eurozone has something similar)
The Eurozone calls them "wire transfers" and they are not expensive--expensive wires are a US thing.
Whenever I explain that the US still largely runs on checks to my European and Chinese colleagues, they look at me like I have three heads. When I explain ACH to them (which still runs on checks) they think I'm either full of shit, or that the guys who designed our banking systems are fucking lunatics.
What part of "shall not be infringed" is so hard to understand?