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."

Comments

Bitcoin is already "real for business"

[TechFurryFox]

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.

Re:Bitcoin is already "real for business"

[cfalcon]

> Bitcoin is already real for business.

Bitcoin is real for SOME businesses who operate online. It's not feasible for anyone else, and it is most DEFINITELY not feasible for everyone.

There's just so MANY reasons why bitcoin has issues. I'll list a few, and maybe someone can pop in with more.

1- Bitcoin transactions can take hours to complete, and in no cases do they complete fast. The global transactions per second possible is really low (like less than 20), compared to thousands for credit cards / etc. In *practice* the total transactions per second possible now is less than five.
2- To speed up the transactions to even the theoretical max would require a bunch of random people to agree on standards, but with a low limit they find that people will "bribe" the system by enclosing a transaction fee into their transaction. This moves the transaction higher in the priority (because the processors stand to get some payment). That's not inherently awful, but it means that any time someone wants to speed stuff up for everyone, the people doing the processing stand to lose money- so, of course, they don't want this to happen.
3- Everyone who touches this stuff seems to turn into some kind of thief. It's like dark magic. Feds bust DPR, one of them steals his shit. Mt Gox takes off with everyone's cash, or a hacker does, or who knows, the point is it is gone. It's all gone, every time. Put bitcoins in this jar, I have a plan. Oops, the plan was to take the jar.
4- The people sound absolutely insane. I'm a libertarian, and they sound insane to me- imagine how all this screed sounds to someone who isn't even of that persuasion.
5- A ton of bitcoin are locked up by the person or people who premined it, who may or may not be the businessman who got investigated, or who knows. The whole thing is shrouded in ludicrous amounts of secrecy.

Bitcoin has a niche for now, but this is very volatile and backed by nothing except scarcity. 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.

So it's a currency that takes a premium above the market share to buy, takes a premium to trade with, takes minutes at BEST to confirm a transaction, usually involves a transaction hit on the sell, and involves a fee to pay to the miners on any transaction- and everyone involved at the high level is both fully invested and fully delusional. Oh, and the price is ludicrously volatile. And everyone who you trust immediately turns into bats and flies away.

Re:Bitcoin is already "real for business"

[shaitand]

"1- Bitcoin transactions can take hours to complete, and in no cases do they complete fast"

Several years ago sure. Typically minutes with todays hashing rate.

"3- Everyone who touches this stuff seems to turn into some kind of thief. It's like dark magic. Feds bust DPR, one of them steals his shit. Mt Gox takes off with everyone's cash, or a hacker does, or who knows, the point is it is gone. It's all gone, every time. Put bitcoins in this jar, I have a plan. Oops, the plan was to take the jar."

In almost every case someone is basically trying to take the form of a bank. In the fiat system all the money is given to the banks (literally, it's created digitally on demand at lower interest than treasury bills, which can then be deposited in the bank allowing the bank to borrow 20x their value, buy tbills with it, deposit, rinse and repeat). You don't need a bank. No deposits, no having your deposits being ripped off. The problem is the transition period. I've got no fix for that one.

"5- A ton of bitcoin are locked up by the person or people who premined it, who may or may not be the businessman who got investigated, or who knows. The whole thing is shrouded in ludicrous amounts of secrecy."

This is the one I hate hearing the most. At it's peak it was like $200 million bucks worth. So what? Look what zuckerberg got for making facebook. He also is still sitting on most of it (okay he's about to give most of it to charity but pick another, bill gates, steve jobs, etc most of them still have the majority of their stock counting on their business growing and the value going up). Why shouldn't the creator of the system and the early adopters (early investors) make more. Bitcoin operates in a circular fashion as a unit of value in proper exchange for goods and services. It is not a ponzi or pyramid. This is a hell of a lot more reasonable than the current fiat system which mathematically depends on generating inflation and then automatically gives all the new inflation to people in the top 0.001%.

"and backed by nothing except scarcity"

Wrong. Scarcity is not bitcoins value. Bitcoins value is that it is currently the only commodity which is impossible to counterfeit. There is not a single .00000000001 BTC worth of fake bitcoin, anywhere, ever. No government can say that about their currency. If they can make it, and do so cheaply enough to make it viable, someone else can produce it as well. Combine that with scarcity and you have not only the perfect value holding unit but something governments can use to exchange with each other. No longer would the US have to trust that China would under value their currency to gain a trade advantage. No longer could new zealand produce almost nothing of value with a tiny population but live like a thriving highly productive western nation. Bitcoin COULD be made inflationary (although once a currency can divide to arbitrary decimal places it mathematically functions the same as an inflationary currency, you just end up trading smaller bits rather than larger quantities and no longer need to figure out who to give the money to). But the system to determine more units were needed in circulation would need to also be a distributed peer system that works automatically based on math. The average transaction size goes below x, add to the blockchain and if 60% of clients agree the extended blockchain is valid the extension is valid.

"takes a premium to trade with"

This is true of all digitial currencies. Even with regular fiat currencies, cash transactions have a premium because they have a minimum unit size and fractions get shaved.

"Oh, and the price is ludicrously volatile."

True but that is primarily a problem of scale. If the bitcoin market were the size of a major nations economy it would be just as stable if not more so.

Re:Bitcoin is already "real for business"

[cfalcon]

I'm pretty sure you are serious, so I'll respond.

1- Why are you changing the game to "settlement"? No one cares how long it takes to write a check to clear your credit card balance. Does debit card "settlement" take months? The point is that cash, check, and plastic all take less time than bitcoin to do a goddamned thing with, and all of them have recourse in event of fraud.
"3"- Comparing it to cash is silly. Yes, it can be stolen, like cash. But you don't have to keep all your dollars in cash, whereas you DO have to keep all your bitcoin in bitcoin. Cash is anonymous, instant, can be guarded or hidden trivially, doesn't require electricity to work, doesn't require a functioning internet to work, and doesn't require a huge server farm in China to work- and can be stolen. Bitcoin is sorta anonymous, maybe, and the rest isn't true, except the stealing part.
"4"- I don't need to mount some amazing defense of our money supply in order to point out the numerous problems in bitcoin. Bitcoin seems a very early and problem prone solution to a problem that few people have a lot of, and many people have a little of. Whatever the problems are with fiat currency, they are trivial compared to the strange and destructive environment that is bitcoin.

Also, "Bitcoin is not created for your Grama"... a currency that requires you to be some crypto anarchist cyberpunk guy in order to function at all (before the smarter crypto anarchist cyberpunk guy steals all your shit) is an idea too insane for most novels.

Re:Bitcoin is already "real for business"

[Anonymous Coward]

I think what you are saying here is that since it is private there are fewer players, so it is easier for a single player to gain more then 50% of the processing power and doing whatever the fuck they want. This could be solved with technical measures however, precisely because it is a private system. For example each miner may need to be authenticated by all other miners in order to join, there could then be "stay within these limits or you lose access" type requirements. Yes banks are out to screw us over, but they are even MORE out to screw each other over. So you have a bunch of crooks that don't trust each other building the system.

It's not a cryptocurrency, it's a ledger for USD

[raymorris]

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.