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Ex-Google Engineer Launches Blockchain-Based System For Banks (reuters.com)
An anonymous reader quotes a report from Reuters: A former Google engineer, whose speech recognition software is used in more than a billion Android smartphones, has launched a company that uses blockchain technology to build a new operating system for banks. Paul Taylor, a Cambridge University academic with an expertise in artificial intelligence, speech synthesis and machine learning, started working on the system, called Vault OS, two years ago in a basement in London's Shoreditch district, known for being a tech start-up hub. The technology, which underpins the digital currency bitcoin, creates a shared database in which participants can trace every transaction ever made. The ledger is tamper-proof and transparent, meaning that transactions can be processed without the need for third-party verification. The system also negates the need for costly in-house data centers, as it uses cloud-based systems, which banks can use on a "pay-as-you-go" basis, which means that there is no single point of failure. Taylor said major high-street banks were spending around a billion pounds ($1.3 billion) a year on computer technology, much of which he said was being used for propping up the current "legacy" systems rather than on any innovative technology. The start-up has been working with about ten banks, Taylor said, at least one of which would be starting a trial using the new system in August. He expects the system to be up-and-running within about a year. In banking-related news, a Congressional report shows that China's spies hacked into computers at the Federal Deposit Insurance Corporation (FDIC) from 2010 until 2013 and American government officials tried to cover it up.
I was about to mod him down. Even if he is making a point. How this post is related to the subject? So, it is surely offtopic. Then it will be mod down eventually.
Achille Talon
Hop!
Jemima Kelly may not know what an operating system is but the submitter should.
Editors - please take a look at that summary and convert it into something that does not look so utterly stupid and ignorant.
The blockchain itself is only as safe as it's users. Bitcoin has struggled with it as large BC miner consortiums are almost large enough to be able to control the blockchain. If these 'custom' blockchains are not public but only between banks, then it becomes very possible that 'a consortium of criminals' at one of the banks or in one of the many government oversight committees (FTC, SEC, FDIC) would be able to manipulate the entire chain - it's not like the Chinese and Russians haven't been able to monitor their systems unnoticed for the better half of the last decade.
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So you've got this encrypted system that's kind of like a Usenet for transactions. I make a change locally, eventually it propagates across the world. The databases are on everyone's computers versus on several hundred servers like Usenet.
The "distributed ledger" is supposed to be the Next Big Thing. And I don't mean that with any sarcasm or negativity. But how well will it scale really, if the ledgers/databases are on people's computers instead of a network of several powerful servers connected by a fast backbone?
I'm a total tyro when it comes to the distributed ledger. I've never used Bitcoin. But it - the distributed ledger - seems hackable, with no recourse if you lose your stash. And its scalability seems limited.
The article is content-free and makes no sense, as so many of these articles do. It's also barely longer than the "summary". At least this one didn't fall victim to the usual tech reporting failure of saying the blockchain is public. Still, the magical blockchain does not eliminate $1.2 billion in expenses. Far from it. If anything, their hardware expenses will go up, because they have to devote hardware to hashing, where before, a financial transaction was a straight-forward database transaction. They still have to keep track of everything they keep track of now, plus hash. Now, they can control and explicitly cap the amount of hashing required to drive the system, since they're not limited to the Bitcoin implementation, but there still has to be work done, i.e. processing.
Here's the nonsensical part though:
The start-up has been working with about ten banks, Taylor said, at least one of which would be starting a trial using the new system in August.
At least one? You mean at least two. One bank doesn't need a blockchain at all. The controls required to prevent internal fraud are quite simple when you know everything there is to know about both sides of the transaction. It's when one party of the transaction has an account at a different bank that a blockchain comes in. The banks are hoping to disintermediate the Automated Clearing House (in the US) and the Pan-European Automated Clearing House (with the cutesy PE-ACH acronym). In practice, they're going to discover that sufficient hashing to secure 100 billion transactions per year (ACH+EPN+PE-ACH) is neither free nor even cheap. It remains to be seen if hashing expenses can be kept below ACH fees.
It mentions a blockchain AND cloud computing in one go. Who won at buzzword bingo on this one?
A thousand pounds of wood moving at 300 feet per minute. Don't get in the way.
Almost? It's passed that point at least once. I don't know if it ever recovered.
Your ad here. Ask me how!
> participants can trace every transaction ever made
All the more reason to keep using Cash ! I don't want my wife knowing that I finish work early and go to the pub for an hour every evening.