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Here's the press release (pdf): http://static1.squarespace.com/static/55f73743e4b051cfcc0b02cf/t/55f8119ce4b0550fcc16d156/1442320796627/PRESS+RELEASE+Global+ban

Here's the press release (pdf): http://static1.squarespace.com/static/55f73743e4b051cfcc0b02cf/t/55f8119ce4b0550fcc16d156/1442320796627/PRESS+RELEASE+Global+banks+form+partnership+with+R3+-+FINAL.pdf http://static1.squarespace.com/static/55f73743e4b051cfcc0b02... This sounds exciting. My gut reaction was that the banks aren't going to use it for actually transferring money, but as a way to notarize transactions that will be acknowledged by the whole group. It does sound like a cool way to verify everything going on among a network of players. And there's a lot of weird hate towards bank on HN. I know they're not great, but it's really not helping the conversation to just say things like "woooo banks are scary!" //edit: A key quote from the press release: > The group will collaborate on research, experimentation, design, and engineering to help advance state-of-the-art enterprise-scale shared ledger solutions to meet banking requirements for security, reliability, performance, scalability, and audit. It's a shared ledger system! So, really no need to have it be bitcoin. It does make sense. It'll be great to see the confused looks on lawyer's faces when they try to lobby to change the blockchain history.

gleenn 11y ago
The irony about the hate is that having a decentralized way to do things like this is actually going to help unseat some of the banks' powers.
- Animats 11y ago
  No, what this does is reduce the need for clearinghouse entities, such as Depository Trust Company, National Securities Clearing Corporation, the Fixed Income Clearing Corporation, and The Options Clearing Corporation. There's a back-end bookkeeping system in finance which tracks who owns what. That's where blockchain technology applies. Banks can't do this themselves, because there's a mutual mistrust problem. So there are all those clearinghouse companies, which maintain the databases.
  - civilian 11y ago
    This is a great observation, I didn't realize that clearinghouses were a thing. John, have you thought about what other backend bookkeeping systems could benefit from using blockchains?
  - MikeNomad 11y ago
    So the solution is moving to a new method and process driven by the banks, and with the removal of third party oversight? No thanks. If there is a system, it can, and eventually will, be gamed.
- Sven7 11y ago
  I'll don't buy this BS about the block chain, when the power to verify it centralizes power in the hands of those that can afford the most computing resources.
  - icebraining 11y ago
    A few notes: Being the people or group who can afford "the most" computing resources is not enough, at least as that expression is commonly used. To make an analogy, Bill Gates is the US citizen with the most wealth, but you'd need to join hundreds or thousands of people to gather 50+%, which is what you need to launch the attach you're mentioning. Also, it's not true that only they would get the power to verify it; everyone can verify the transactions on the blockchain. What they would gain is the ability to double-spend their Bitcoins, and not without getting noticed by the rest of the network.
toomuchtodo 11y ago
> And there's a lot of weird hate towards bank on HN. I think that's because of the egalitarian ideas readers of HN subscribe to (is that a big leap of faith?). Bankers getting new fangled tech is watching the f......s who brought the world economy to its knees getting shiny new toys. Hard to be happy about that.
- redthrowaway 11y ago
  >egalitarian Meritocratic, perhaps. HN is pretty Libertarian, and Libertarianism is the polar opposite of egalitarianism. It's the equal opportunity vs equal outcome divide.
  - toomuchtodo 11y ago
    Either way you cut it, we're pretty bent against the incumbent.
    - larrys 11y ago
      Maybe those with non-conforming views simply decide to keep their mouths shut for fear of some kind of retribution which could be either written or downvotes by the majority that are reading a particular story or comment thread.
      - toomuchtodo 11y ago
        I'd encourage you to speak your mind. I purposely upvote comments I don't agree with as long as they're constructive to the conversation.
    - wwweston 11y ago
      The status quo seems to more or less think of itself as meritocratic, too.
      - dragonwriter 11y ago
        > The status quo seems to more or less think of itself as meritocratic, too. Those successful in the status quo at any point in time are inclined to perceive, or at least portray, that status quo as meritocratic. This probably shouldn't be surprising.
bradleyjg 11y ago
I don't quite understand why you need some of the strong cryptography properties when you have a small, known group of players all of whom are tied together by enforceable contractual relationships. What can this private blockchain do that a vanilla shared database with change logs can't do?
- mtgx 11y ago
  Heard of Libor?
  - lallysingh 11y ago
    This, yes. Some institutions have problems with bad actors, and this sort of stuff can limit that risk. Sound bank-y enough? :-)
- exelius 11y ago
  Provide assurances that nobody is modifying the data behind the scenes (i.e. there's no room for making a change and deleting it from the change logs). They probably have other solutions for this too, but the blockchain is likely simpler to implement and validate. Just because you have a contract doesn't mean you have an way to prove when someone has broken it. When financial data is involved, you can't trust anyone.
  - danbruc 11y ago
    The innovation of Bitcoin is achieving consensus about information cryptographically protected against tampering with pseudonymity. Neither reaching consensus nor cryptographically protecting data is new, it's really only the added pseudonymity. If you don't need it, you can build much more efficient systems without the need for a proof of work or stake or whatever.
    - exelius 11y ago
      I never really felt Bitcoin was all that pseudonymous - it's trivial to connect a blockchain address to an individual. The blockchain elegantly solves a number of problems that had individual solutions, but does it in a way that is easy to repeat and extend while not having any obvious gaps.
deleted 11y ago
[deleted]
lappa 11y ago
If they don't have miners or Bitcoin, then who is securing the ledger?
- roasbeef 11y ago
  The banks. A selected, privileged number of nodes within the system will validate and sign blocks themselves.
  - lappa 11y ago
    That seems to leave them with the same problem where a single bank can lie and cause problems.
    - roymurdock 11y ago
      Over 50% of the nodes have to be compromised in order to double spend, or change the history of the shared ledger. So assuming all of the banks have the same number of nodes/the same computing power, it would take >50% collusion to cheat the system.
      - lappa 11y ago
        Well if each block has to be signed with 50% of the banks that reduces trust by some degree, however this still can be done more efficiently with a relational database.
        roymurdock 11y ago
        That's what they have now. A third party clearing house (presumably using a relational database) that is the central authority on all intermediary transactions. Creating a blockchain is about removing that third party and instead breaking the trust up between the participating banks.
bduerst 11y ago
This could count as collusion and anti-trust. What happens when a smaller bank that isn't a member of this chain tries to do business with the network? Do these smaller banks lose-out competitively by not being a member? Who is the governing body approving access - the competition?
marcusgarvey 11y ago
>And there's a lot of weird hate towards bank on HN. I know they're not great, but it's really not helping the conversation to just say things like "woooo banks are scary!" Well, in fairness, one of the last times a bunch of banking organizations joined forces on some shiny new innovation was MERS, the Mortgage Electronic Registration System...which facilitated the fraud that helped cause the housing crisis. --------- https://en.wikipedia.org/wiki/Mortgage_Electronic_Registration_Systems https://en.wikipedia.org/wiki/Mortgage_Electronic_Registrati... http://www.ritholtz.com/blog/2013/04/states-fight-back-against-mers-mortgage-fraud/ http://www.ritholtz.com/blog/2013/04/states-fight-back-again...
oneJob 11y ago
Banks aren't scary, they're a-hole dinosaurs. Banks epitomize centralized authority and regulation. Banks borrow money for less than they lend it effectively guaranteeing a profit if properly and concervatively managed, and yet they have recently and repeatedly failed. In the process they have inflicted enormous harm to our economy and lives, but they have not shared a proportionate share of the costs. The costs they impose hardly justify the veritable monopolies banks are afforded by the laws and regulations which are very effective at preventing competitors from entering the market. Now consider where the tyical HN reader comes down on these issues. So yeah. Not a lot of love for banks.
- rtpg 11y ago
  >Banks borrow money for less than they lend it effectively guaranteeing a profit if properly and concervatively managed Sure, in a magical world where 100% of people pay back their loans. 2008 happened for a reason
  - deleted 11y ago
    [deleted]
  - lugg 11y ago
    I'm not sure what you're point is here. There is no magical world 2008 or not, never do you see 100% of people paying back their loans. Conservatively managing loans means minimising lending to people likely to default, and leveraging enough to cover those who do. You do not need 100% of people to pay back their loans to turn a profit, charging interest is what makes this manageable and guarantees a profit.
    - meric 11y ago
      If you conservatively run a consulting business, you can 'guarantee' a profit too.
    - 3pt14159 11y ago
      While I agree that bankers hold too much influence in politics, this line of thinking is obviously incorrect. First, bankers have margins and compete like any other entity. If they are too conservative they will not get enough borrowers to cover the cost of their staff and facilities. Furthermore, to just earn a profit is not enough, a banker needs to earn a profit consummate with its market capitalization. Most banks are publicly traded, after all.
PhasmaFelis 11y ago
> And there's a lot of weird hate towards bank on HN. Four million wrongful foreclosures in 2009-2010 alone: http://crooksandliars.com/heather/review-finds-4-million-people-wrongfully-f http://crooksandliars.com/heather/review-finds-4-million-peo... That means four million families' homes illegally stolen from them. Don't pretend this is some goofy hippie fuck-the-man thing. When someone commits that much theft, a rational person doesn't leave them alone with the silverware.
tinfoilman 11y ago
Not my field however I feel you have a mis-understanding. You are talking about a shared ledger system, then saying that bitcoin has no part of it. Bitcoin is the token of PoW. So all the miners confirm transactions on the blockchain and in turn are rewarded with bitcoins. This keeps the miners doing their job, and the main reason the bitcoin ledge is immutable. If you remove the bitcoin from the ecosystem then it will be down to the banks to secure their own blockchain with their own mining pools at which point the banks control all the mining, you lose the trusted status of the ledger. As with the main block chain if a miner gets 51% of the mining then they can do a number of attacks to change the shared ledger. What I am getting at, I do not see how blockchain technology works without a token to validate it (be it bitcoin/bankcoin/englandcoin/fuckcoin. However if that token is only controlled by the banks are we not back right where we started? with banks having a private ledger between themselves that they can change. Blockchain/bitcoin work because the people securing the network have an incentive to keep the system going. The only people interested in securing the banks blockchain will be the banks, unless they offer their customers mining equipment, but the day a bank shares its ability to mint value is the day I prove that well something unthinkable. The banks blockchain will just become another private database that is not secured in the real world in anyway and in turn losses the status of an immutable ledge. We will see
- nickik 11y ago
  Its a private blockchain, their is a usecase. The its enougth for the banks to trust each other, it might not be to prove to 'the public' but within the private agreements of the banks it counts as trused. The problem is that you want a revolution and this is evolution. > However if that token is only controlled by the banks are we not back right where we started? They never wanted to change it. For them it might just be about improving the verifiabilty compared to the current system. They need not have broader aims then that and a blockchain between banks can help with that. See: https://blog.ethereum.org/2015/08/07/on-public-and-private-blockchains/ https://blog.ethereum.org/2015/08/07/on-public-and-private-b...
inDigiNeous 11y ago
Weird hate? Most of the problems we are facing now with the economical system is because banks ARE CREATING MONEY OUT OF NOTHING and then decreasing the actual value of EVERYTHING, and moving power to those who are in good terms with them, effectively setting in stone a rule of power system that enslaves people to their home mortgages and jobs they dont want to work on. "Weird hate", yeah it might be weird if you don't understand what they are doing. And they are masking it in this veil of complexity, when in reality it's very simple.

gleenn 11y ago

The irony about the hate is that having a decentralized way to do things like this is actually going to help unseat some of the banks' powers.

Animats 11y ago
No, what this does is reduce the need for clearinghouse entities, such as Depository Trust Company, National Securities Clearing Corporation, the Fixed Income Clearing Corporation, and The Options Clearing Corporation. There's a back-end bookkeeping system in finance which tracks who owns what. That's where blockchain technology applies. Banks can't do this themselves, because there's a mutual mistrust problem. So there are all those clearinghouse companies, which maintain the databases.
- civilian 11y ago
  This is a great observation, I didn't realize that clearinghouses were a thing. John, have you thought about what other backend bookkeeping systems could benefit from using blockchains?
- MikeNomad 11y ago
  So the solution is moving to a new method and process driven by the banks, and with the removal of third party oversight? No thanks. If there is a system, it can, and eventually will, be gamed.
Sven7 11y ago
I'll don't buy this BS about the block chain, when the power to verify it centralizes power in the hands of those that can afford the most computing resources.
- icebraining 11y ago
  A few notes: Being the people or group who can afford "the most" computing resources is not enough, at least as that expression is commonly used. To make an analogy, Bill Gates is the US citizen with the most wealth, but you'd need to join hundreds or thousands of people to gather 50+%, which is what you need to launch the attach you're mentioning. Also, it's not true that only they would get the power to verify it; everyone can verify the transactions on the blockchain. What they would gain is the ability to double-spend their Bitcoins, and not without getting noticed by the rest of the network.

toomuchtodo 11y ago

> And there's a lot of weird hate towards bank on HN. I think that's because of the egalitarian ideas readers of HN subscribe to (is that a big leap of faith?). Bankers getting new fangled tech is watching the f......s who brought the world economy to its knees getting shiny new toys. Hard to be happy about that.

redthrowaway 11y ago
>egalitarian Meritocratic, perhaps. HN is pretty Libertarian, and Libertarianism is the polar opposite of egalitarianism. It's the equal opportunity vs equal outcome divide.
- toomuchtodo 11y ago
  Either way you cut it, we're pretty bent against the incumbent.
  - larrys 11y ago
    Maybe those with non-conforming views simply decide to keep their mouths shut for fear of some kind of retribution which could be either written or downvotes by the majority that are reading a particular story or comment thread.
    - toomuchtodo 11y ago
      I'd encourage you to speak your mind. I purposely upvote comments I don't agree with as long as they're constructive to the conversation.
  - wwweston 11y ago
    The status quo seems to more or less think of itself as meritocratic, too.
    - dragonwriter 11y ago
      > The status quo seems to more or less think of itself as meritocratic, too. Those successful in the status quo at any point in time are inclined to perceive, or at least portray, that status quo as meritocratic. This probably shouldn't be surprising.

bradleyjg 11y ago

I don't quite understand why you need some of the strong cryptography properties when you have a small, known group of players all of whom are tied together by enforceable contractual relationships. What can this private blockchain do that a vanilla shared database with change logs can't do?

mtgx 11y ago
Heard of Libor?
- lallysingh 11y ago
  This, yes. Some institutions have problems with bad actors, and this sort of stuff can limit that risk. Sound bank-y enough? :-)
exelius 11y ago
Provide assurances that nobody is modifying the data behind the scenes (i.e. there's no room for making a change and deleting it from the change logs). They probably have other solutions for this too, but the blockchain is likely simpler to implement and validate. Just because you have a contract doesn't mean you have an way to prove when someone has broken it. When financial data is involved, you can't trust anyone.
- danbruc 11y ago
  The innovation of Bitcoin is achieving consensus about information cryptographically protected against tampering with pseudonymity. Neither reaching consensus nor cryptographically protecting data is new, it's really only the added pseudonymity. If you don't need it, you can build much more efficient systems without the need for a proof of work or stake or whatever.
  - exelius 11y ago
    I never really felt Bitcoin was all that pseudonymous - it's trivial to connect a blockchain address to an individual. The blockchain elegantly solves a number of problems that had individual solutions, but does it in a way that is easy to repeat and extend while not having any obvious gaps.

deleted 11y ago

[deleted]

lappa 11y ago

If they don't have miners or Bitcoin, then who is securing the ledger?

roasbeef 11y ago
The banks. A selected, privileged number of nodes within the system will validate and sign blocks themselves.
- lappa 11y ago
  That seems to leave them with the same problem where a single bank can lie and cause problems.
  - roymurdock 11y ago
    Over 50% of the nodes have to be compromised in order to double spend, or change the history of the shared ledger. So assuming all of the banks have the same number of nodes/the same computing power, it would take >50% collusion to cheat the system.
    - lappa 11y ago
      Well if each block has to be signed with 50% of the banks that reduces trust by some degree, however this still can be done more efficiently with a relational database.
      - roymurdock 11y ago
        That's what they have now. A third party clearing house (presumably using a relational database) that is the central authority on all intermediary transactions. Creating a blockchain is about removing that third party and instead breaking the trust up between the participating banks.

bduerst 11y ago

This could count as collusion and anti-trust. What happens when a smaller bank that isn't a member of this chain tries to do business with the network? Do these smaller banks lose-out competitively by not being a member? Who is the governing body approving access - the competition?

marcusgarvey 11y ago

>And there's a lot of weird hate towards bank on HN. I know they're not great, but it's really not helping the conversation to just say things like "woooo banks are scary!" Well, in fairness, one of the last times a bunch of banking organizations joined forces on some shiny new innovation was MERS, the Mortgage Electronic Registration System...which facilitated the fraud that helped cause the housing crisis. --------- https://en.wikipedia.org/wiki/Mortgage_Electronic_Registration_Systems https://en.wikipedia.org/wiki/Mortgage_Electronic_Registrati... http://www.ritholtz.com/blog/2013/04/states-fight-back-against-mers-mortgage-fraud/ http://www.ritholtz.com/blog/2013/04/states-fight-back-again...

oneJob 11y ago

Banks aren't scary, they're a-hole dinosaurs. Banks epitomize centralized authority and regulation. Banks borrow money for less than they lend it effectively guaranteeing a profit if properly and concervatively managed, and yet they have recently and repeatedly failed. In the process they have inflicted enormous harm to our economy and lives, but they have not shared a proportionate share of the costs. The costs they impose hardly justify the veritable monopolies banks are afforded by the laws and regulations which are very effective at preventing competitors from entering the market. Now consider where the tyical HN reader comes down on these issues. So yeah. Not a lot of love for banks.

rtpg 11y ago
>Banks borrow money for less than they lend it effectively guaranteeing a profit if properly and concervatively managed Sure, in a magical world where 100% of people pay back their loans. 2008 happened for a reason
- deleted 11y ago
  [deleted]
- lugg 11y ago
  I'm not sure what you're point is here. There is no magical world 2008 or not, never do you see 100% of people paying back their loans. Conservatively managing loans means minimising lending to people likely to default, and leveraging enough to cover those who do. You do not need 100% of people to pay back their loans to turn a profit, charging interest is what makes this manageable and guarantees a profit.
  - meric 11y ago
    If you conservatively run a consulting business, you can 'guarantee' a profit too.
  - 3pt14159 11y ago
    While I agree that bankers hold too much influence in politics, this line of thinking is obviously incorrect. First, bankers have margins and compete like any other entity. If they are too conservative they will not get enough borrowers to cover the cost of their staff and facilities. Furthermore, to just earn a profit is not enough, a banker needs to earn a profit consummate with its market capitalization. Most banks are publicly traded, after all.

PhasmaFelis 11y ago

> And there's a lot of weird hate towards bank on HN. Four million wrongful foreclosures in 2009-2010 alone: http://crooksandliars.com/heather/review-finds-4-million-people-wrongfully-f http://crooksandliars.com/heather/review-finds-4-million-peo... That means four million families' homes illegally stolen from them. Don't pretend this is some goofy hippie fuck-the-man thing. When someone commits that much theft, a rational person doesn't leave them alone with the silverware.

tinfoilman 11y ago

Not my field however I feel you have a mis-understanding. You are talking about a shared ledger system, then saying that bitcoin has no part of it. Bitcoin is the token of PoW. So all the miners confirm transactions on the blockchain and in turn are rewarded with bitcoins. This keeps the miners doing their job, and the main reason the bitcoin ledge is immutable. If you remove the bitcoin from the ecosystem then it will be down to the banks to secure their own blockchain with their own mining pools at which point the banks control all the mining, you lose the trusted status of the ledger. As with the main block chain if a miner gets 51% of the mining then they can do a number of attacks to change the shared ledger. What I am getting at, I do not see how blockchain technology works without a token to validate it (be it bitcoin/bankcoin/englandcoin/fuckcoin. However if that token is only controlled by the banks are we not back right where we started? with banks having a private ledger between themselves that they can change. Blockchain/bitcoin work because the people securing the network have an incentive to keep the system going. The only people interested in securing the banks blockchain will be the banks, unless they offer their customers mining equipment, but the day a bank shares its ability to mint value is the day I prove that well something unthinkable. The banks blockchain will just become another private database that is not secured in the real world in anyway and in turn losses the status of an immutable ledge. We will see

nickik 11y ago
Its a private blockchain, their is a usecase. The its enougth for the banks to trust each other, it might not be to prove to 'the public' but within the private agreements of the banks it counts as trused. The problem is that you want a revolution and this is evolution. > However if that token is only controlled by the banks are we not back right where we started? They never wanted to change it. For them it might just be about improving the verifiabilty compared to the current system. They need not have broader aims then that and a blockchain between banks can help with that. See: https://blog.ethereum.org/2015/08/07/on-public-and-private-blockchains/ https://blog.ethereum.org/2015/08/07/on-public-and-private-b...

inDigiNeous 11y ago

Weird hate? Most of the problems we are facing now with the economical system is because banks ARE CREATING MONEY OUT OF NOTHING and then decreasing the actual value of EVERYTHING, and moving power to those who are in good terms with them, effectively setting in stone a rule of power system that enslaves people to their home mortgages and jobs they dont want to work on. "Weird hate", yeah it might be weird if you don't understand what they are doing. And they are masking it in this veil of complexity, when in reality it's very simple.