9 ms·

Tech and Banking Giants Ditch Bitcoin for Their Own Blockchain

101 points by dankohn1 11y ago

pilatesfordogs 11y ago
Does anyone have a link to a simplistic explanation of the block chain and why it seems to be so relevant?
- joeyspn 11y ago
  A bit long, but probably the best explanation you can find out there... https://www.youtube.com/watch?v=sE7998qfjgk https://www.youtube.com/watch?v=sE7998qfjgk
- macns 11y ago
  blockchain aims to solve the "Two Generals' Problem"[0] short explanation in video[1] On what the article says, transactions not relying on the first bitcoin blockchain are more vulnerable to 51% attacks[2]. Though if that many big corps joined, they could achieve a well established, attack-proof consensus relatively fast - - this probably is bad news[3] for Bitcoins' blockchain "ambitions" which is considered by many a solution to de-centralize the "internet" or services depending on third parties. [0] In computing, the Two Generals Problem, is a thought experiment meant to illustrate the pitfalls and design challenges of attempting to coordinate an action by communicating over an unreliable link: https://en.wikipedia.org/wiki/Two_Generals%27_Problem https://en.wikipedia.org/wiki/Two_Generals%27_Problem [1] https://www.youtube.com/watch?v=sYduOfRLHq0 https://www.youtube.com/watch?v=sYduOfRLHq0 [2] https://en.bitcoin.it/wiki/Weaknesses#Attacker_has_a_lot_of_computing_power https://en.bitcoin.it/wiki/Weaknesses#Attacker_has_a_lot_of_... EDIT: format, clarification UPDATE: [3] just saw the linux foundation page, this might actually be a good thing, forgive my ignorance
  - sanswork 11y ago
    >blockchain aims to solve the "Two Generals' Problem"[0] short explanation in video[1] PoW aims to solve that. Blockchains are just a way to store data in an agreed format with immutability and known ordering. >On what the article says, transactions not relying on the first bitcoin blockchain are more vulnerable to 51% attacks 51% attacks are an issue for PoW systems. Private chains don't need PoW so aren't vulnerable to them.
    - brighton36 11y ago
      Private chains are also trivially compromised. Much more so than a traditional database
      - sanswork 11y ago
        Please share with the class how?
        brighton36 11y ago
        Look into nxt, peercoin, a few of the other pos chains. They all failed due to stake grinding. read the poelstra papers for why pos is untenable
        sanswork 11y ago
        When you know every participant you don't need PoS or PoW you can us RR. Like I've said elsewhere you are arguing from ignorance and because you've bought into the religion of bitcoin.
        brighton36 11y ago
        Round robin is trivially DOS'd . also, sharing your private finance data with your competitors is not an economic efficiency. Bitcoin isnt good for very much, it's mostly just useful for value transmission and censorship resistance. You're new to blockchains and don't know that, so you intend to blockchain all the things. Which is a way more extreme view.
        sanswork 11y ago
        How is it trivially DOS'd? You don't need to share all your private data just the data about transfers using the system which isn't going to be particularly sensitive unless you are in a bad way financially and will be worth it to minimize the amount of settlements required of your business. I'm new to blockchains? I'm pretty sure I'm not.
- brighton36 11y ago
  It's a buzzword, its a database, but with better marketing behind it.
jordigh 11y ago
So what is going to replace miners? What incentive will people have to verify the integrity of this new blockchain? Is it still vulnerable to 51% attacks?
- joeyspn 11y ago
  https://en.wikipedia.org/wiki/Proof-of-stake https://en.wikipedia.org/wiki/Proof-of-stake ?
  - dacox 11y ago
    https://en.bitcoin.it/wiki/Altcoin#Proof_Of_Stake https://en.bitcoin.it/wiki/Altcoin#Proof_Of_Stake Because these attacks exists, including Peercoin[3] and Blackcoin[4] proof of stake cryptocurrencies have "master" public keys that control the blockchain. I wonder who would control that ;) This class of cryptocurrency is either insecure or centralized, however proof of stake (based on a PoW currency) is useful in some systems because gaining stake is costly, but it isn't workable for bootstrapping distributed consensus. This would be an interesting though experiment. If they implemented proof of stake based on a proof of work currency, like Bitcoin, what would happen if the new currency took off and Bitcoin started to die? Now there's a threat model that requires unmotivated miners to still secure the network, both networks.
- dacox 11y ago
  The pessimist in me says nothing, but we'll see.
- wmf 11y ago
  https://www.stellar.org/blog/stellar-consensus-protocol-proof-code/ https://www.stellar.org/blog/stellar-consensus-protocol-proo... ? But seriously, "OBC currently offers two implementations of PBFT (Practical Byzantine Fault Tolerant) consensus, as a means to validate transactions".
- sanswork 11y ago
  When you know the participants PoW is just a waste. You can use something like round robin to determine who gets to add the next block. That means that no it's not.
yarrel 11y ago
Jettisoning any advantage to using the blockchain rather than a centralised database. This is the snake oil phase of cryptocurrency. Or, more charitably, the not-inhaling phase.
- mpeg 11y ago
  There are a lot of misunderstandings about blockchain technology. One of the most common is believing that everyone who uses their own chains are not using the bitcoin Blockchain, which is usually not the case (apart from some notable examples like Ripple or Ethereum), you can use the Blockchain with marked bitcoins or other mechanisms to essentially "convert" them to other currencies in a provable way. Another is that everything that needs to be distributed should be done in blockchains, whether there is trust between peers or not.
nissimk 11y ago
Here is the press release: http://www.linuxfoundation.org/news-media/announcements/2015/12/linux-foundation-unites-industry-leaders-advance-blockchain http://www.linuxfoundation.org/news-media/announcements/2015... And the website: https://blockchain.linuxfoundation.org/ https://blockchain.linuxfoundation.org/ Please post if there is any more information.
- deleted 11y ago
  [deleted]
- sa5 11y ago
  There are some more technical details at https://www.ibm.com/developerworks/community/blogs/gcuomo/entry/The_Force_of_Blockchain_Awakens?lang=en https://www.ibm.com/developerworks/community/blogs/gcuomo/en...
logfromblammo 11y ago
"Ditching" Bitcoin? Wouldn't that imply that they had previously adopted Bitcoin to some meaningful extent? Bitcoin is merely proof of concept for the underlying technology. I expect that there will be many more offshoots in the future, beyond the pieces used by the existing banking system. But I won't really care about any of them, until one of them allows me to work, buy, and sell without being forced to trust any third party that I find to be intrinsically untrustworthy--including governments, banks, cartel enforcers, mobsters, miner brigades, and Anonymous. Not there yet. This isn't even a step in that direction. But what I do like about this is that it may have the potential to simplify mutual insurance, interbank settlement, and securities exchanges. It would be nice if the funds from an electronic transfer to my spouse could be made available faster than writing out a paper check and depositing it at a branch ATM. I would also be particularly interested if it could end certain semi-fraudulent practices, such as short positions that are not appropriately matched against a long counterparty, or speculative phantom commodities contracts that are never actually redeemed by delivery.
- fapjacks 11y ago
  Nice username, bub!
- jsprogrammer 11y ago
  I don't see what advantage an offshoot would have. The current blockchain is the longest; there's no reason to ditch it.
  - logfromblammo 11y ago
    No reasons? The nature of the Bitcoin's SHA-256 POW means that individuals can no longer meaningfully contribute to the integrity of the chain, and this responsibility is increasingly held by fewer individuals with access to (relatively) expensive specialized ASIC machines. The Bitcoin system has (relatively) few legit trade opportunities yet, but is well used by scammers and black marketeers. The median person has little use for Bitcoin as it is now. MtGOX showed that exchanges are a point of vulnerability. Silk Road seizure showed that Bitcoin is vulnerable to rubber-hose cryptanalysis and reminded everyone it is only pseudoanonymous. Governments have already moved to attack Bitcoin or users of Bitcoin. Mostly these are proactive attempts to defend domestic currency controls, or concerns over money laundering. The "dust DoS" attacks have called into question whether Bitcoin can scale much larger than its current extent. You can't use Bitcoin with Apple Pay or Google Wallet. You actually can't get an app approved for Apple's App Store if it includes the ability to send Bitcoin. Google play doesn't allow in-app purchases in Bitcoin. There's no reason to ditch it if you have already adopted it, but there's also no particular reason to adopt it in the first place, if something better might come along within a year or two. The banks aren't buying in. I haven't either.
macns 11y ago
Reading the participants' comments below the announcement, most of them speak of an open/distributed ledger, not Bitcoin's blockchain. So it seems they really are ditching the original blockchain. IBM intends to contribute tens of thousands of lines of its existing codebase and its corresponding intellectual property to this open source community. Digital Asset is contributing the Hyperledger mark, which will be used as the project name, as well as enterprise grade code and developer resources. R3 is contributing a new financial transaction architectural framework designed to specifically meet the requirements of its global bank members and other financial institutions. These technical contributions, among others from a variety of companies, will be reviewed in detail in the weeks ahead by the formation and Technical Steering Committees.
- malandrew 11y ago
  "enterprise grade code" What does that even mean? I read that and think to myself "cowboy generated spaghetti code with more bugs and more technical debt".
  - ethbro 11y ago
    > IBM... "enterprise grade code" Java.
  - l3m0ndr0p 11y ago
    Outsourced
  - mikekchar 11y ago
    Without being sarcastic, I think it means scalable so that it can be deployed in a situation where you have tens of thousands of seats. Generally it also means that you have some way of monitoring that it is working across the network. Finally, it usually means that it is an integrated turnkey system that doesn't require you to separately install and maintain a lot of third party support systems that it depends on. You can think of the opposite of "enterprise" software as realizing that if you use independent packages a,b, and c and tie them together with some shell script that it will do what you want. It's only been tested by one or two guys, but you can't see any reason why it wouldn't work for the 10,000 people on your site (famous last words...). You spend a week patching it together and roll it out on the weekend with no way to roll back if it doesn't work, etc. Still not a fan of enterprise software, but I don't work for enterprise companies any more ;-)
malandrew 11y ago
I just hope that any solution adopted doesn't aid or reinforce cartel-like behavior. We already have a financial system where the incumbents can easily block the entrance of a new, nimbler upstart that would disrupt existing institutions and increase productivity. The article even mentioned at least one existing institution that has an incentive to preserve the problem to which they are the solution: "Indeed, some companies involved in the project may feel threatened by existing efforts to reinvent the financial markets with the blockchain. State Street bank, for instance, stands to lose if companies start using Overstock’s technology to borrow stock. In the US, the stock loan business is a $954 billion market; State Street, known as an agent lender, is a big part of that. Its future depends on getting ahead of the game. Relevant: "The Shirky Principle" by Kevin Kelly http://kk.org/thetechnium/the-shirky-prin/ http://kk.org/thetechnium/the-shirky-prin/
SoyNut 11y ago
entrepreneur: "About your open blockchain project, sir." IBM PR correspondent: "Yes, what about?" entrepreneur: "Well, it's closed source. I don't see public repositories anywhere for it." IBM PR correspondent: "No it's not closed source! It's just not available to you or anyone who doesn't have access to our network. Just ask our business partners if it's open." The Linux Foundation: "Of course it's open! Open to US!"
- nissimk 11y ago
  Here's the github link :-) https://github.com/hyperledger/hyperledger https://github.com/hyperledger/hyperledger TLDR: there's no code in that repo.
- stymaar 11y ago
  Richard Stallman approves ;)
DennisP 11y ago
It makes sense for the banks to do this, because they have different requirements. Bitcoin is great because it works with an unknown set of untrusted entities, and there's no counterparty risk because the ledger is the currency. Banks have a known set of semi-trusted entities, and want to track off-chain assets. They'll still have counterparty risk, but if they see a way to use chained blocks and something like Byzantine Paxos to speed up interbank settlement, more power to 'em.
- paulhodge 11y ago
  Yup. The actors don't even need to trust each other that much, because they each still need to use their public key to execute a transation. The level of trust is just that everyone will play nicely, such as not purposefully ignoring transactions. The Bitcoin model is good at incentivizing actors to play nicely. Banks have no need to create this incentive, it's already in their interest. The Bitcoin mining system also solves another problem: how to evenly distribute new money in a fair way. Banks have no need for that either.
  - Mtinie 11y ago
    > The Bitcoin mining system also solves another problem: how to evenly distribute new money in a fair way. I was going to disagree with this, but I reconsidered my initial comment and will offer this modification: "The Bitcoin mining system also solves another problem: how to evenly distribute new money in a provably fair way to those with the resources to participate."
  - stymaar 11y ago
    > The Bitcoin mining system also solves another problem: how to evenly distribute new money in a fair way. That is not the problem that mining is addressing. Mining is an incentive for people spending resources to check the integrity of the blockchain. This has nothing to do with «fairness».
- mbgaxyz 11y ago
  Yep. Here's an example of creating a private blockchain, issuing and sending assets (all in 90 seconds). https://makebitcoingreatagain.wordpress.com/2015/11/26/create-a-private-blockchain-in-90-seconds/ https://makebitcoingreatagain.wordpress.com/2015/11/26/creat...
ubersync 11y ago
This is just a glorified DBMS.
- nickpsecurity 11y ago
  Append-only, distributed, fault-tolerant filesystem + standard, financial protocols anyone?
ihsw 11y ago
It should be noted that there is a far more interesting implication -- tech and banking giants ditch SWIFT for their own blockchain. The blockchain and SWIFT are very similar in spirit and in actuality, and it stands to reason that there is consensus that a private blockchain network would be more robust, fast, and secure than SWIFT.
- nickpsecurity 11y ago
  My thoughts exactly given I've designed, but not developed, tech specifically aiming to replace SWIFT. What they do need not cost so much or be so difficult. I was thinking highly secure endpoints and link encryptors to authenticate otherwise P2P traffic with optional 3rd party involvement where extra accountability is needed.
- joveian 11y ago
  I don't know how financial stuff works and hadn't heard of SWIFT, but searching came up with an announcment of them joining this effort: http://www.swift.com/about_swift/shownews?param_dcr=news.data/en/swift_com/2015/PR_SWIFT_LINUX.xml http://www.swift.com/about_swift/shownews?param_dcr=news.dat...
roymurdock 11y ago
For anyone who needs a (very simplified) primer on the blockchain and why it's relevant for banks: A blockchain is a ledger (piece of paper that records transactions) with perfect memory of every single transaction that has ever occurred within a certain network. This makes double spending within the network impossible as you can trace every single coin in the network back to its origin, verifying that your trading partner does, in fact, have the coin he claims to. This removes the need for a trusted third party to oversee/verify transactions. This is important for banks because currently they pay a 3rd party clearing house to process transactions and transfers between them. They cannot trust each other because their transactions are not linked together in one shared network. If they all agree to get on a shared blockchain (ledger), they can split the costs of continuously verifying the validity of the blockchain (leder) between them, rather than paying a 3rd party for the same service. This would reduce fees within the industry and reduce time between transfers. I used to be very excited about blockchain technology and its implications for creating micro/private currency networks. Something about the financial industry's interest has really turned me off the blockchain and its possible implementations.
- johndevor 11y ago
  > Something about the financial industry's interest has really turned me off the blockchain and its possible implementations. What exactly? And don't you think banks will be more apt to use Bitcoin once things like the lightning network roll out (offering much greater transaction volumes)?
  - roymurdock 11y ago
    I think I was turned off because I envisioned a much grander future for blockchain tech than a glorified clearinghouse for big banks. Banks will never use a public network (like Bitcoin) to manage inter-bank transfers. They'll take the underlying technology and create a custom, private network where they can tweak protocols to their liking. The hard part will be for the banks to form a board to oversee the network, because they'll each have to contribute members and those members will have to work together and trust each other not to make sneaky or unfavorable changes to the underlying codebase of the private network. There will be lots of politics based on relative bank size and power within the network. Should be interesting to see how it plays out.
rburhum 11y ago
This makes sense. What bank would want to have a public ledger effectively advertising their customer data?
deleted 11y ago
[deleted]
mpeg 11y ago
Both Nasdaq omx [0] and Overstock t0.com [1], mentioned in the article, seem to use the Bitcoin Blockchain to peg their internal currency against, they're sidechains, not completely separate blockchains... [0]: https://coincenter.org/wp-content/uploads/2015/06/SecondLetterForRecord-AB1326.pdf https://coincenter.org/wp-content/uploads/2015/06/SecondLett... [1]: http://www.sec.gov/Archives/edgar/data/1130713/000104746915008523/a2226515zs-3a.htm http://www.sec.gov/Archives/edgar/data/1130713/0001047469150...
- kanzure 11y ago
  Timestamping isn't enough to make something a sidechain: https://blockstream.com/sidechains.pdf https://blockstream.com/sidechains.pdf ... unless you are using "sidechain" in a very loose, diluted sense.
  - mpeg 11y ago
    I guess you mean the t0.com chain, I do agree it's not the common case where you can transfer btc in and out of the sidechain. Would it be considered a completely separate chain, since it needs to publish the timestamped hashes on the bitcoin blockchain ? (Or any other, sure, but right now bitcoin is the one with the widest adoption)
Zigurd 11y ago
The regulators get friendly relations with the regulated, and the regulated get to decide how much cryptocurrency they get to skim because they started another blockchain that's friendly to regulators. A crony cryptocurrency. The bet is that regulators will be more comfortable with an indirectly captive blockchain and will use it as a wedge to lever bitcoin out of banking.
mkj 11y ago
So this is more like a git/mercurial chained hash where the head hash proves the existence of all previous revisions? Makes sense. And call it "blockchain" just to keep enough buzzwords.
- DennisP 11y ago
  That plus some kind of consensus algorithm. Proof-of-work prevents Sybil attacks when you don't know who anybody is, but if you have known entities you can use more efficient mechanisms.
- sanswork 11y ago
  So this is just a chain of blocks that each verify the existence of all previous blocks? I can't believe they are calling it a block chain. Clearly it's a chained hash.
- brighton36 11y ago
  Yep, exactly
mongol 11y ago
The Economist article on this I found good. "The notion of shared public ledgers may not sound revolutionary or sexy. Neither did double-entry book-keeping or joint-stock companies. Yet, like them, the blockchain is an apparently mundane process that has the potential to transform how people and businesses co-operate. Bitcoin fanatics are enthralled by the libertarian ideal of a pure, digital currency beyond the reach of any central bank. The real innovation is not the digital coins themselves, but the trust machine that mints them—and which promises much more besides." http://www.economist.com/news/leaders/21677198-technology-behind-bitcoin-could-transform-how-economy-works-trust-machine http://www.economist.com/news/leaders/21677198-technology-be...
- brighton36 11y ago
  This article was a PR release for factom which is an obvious scam (they sell checksums). Notarization for the underserved is not a real idea.
  - paulsnx2 11y ago
    Brighton36 is Factom's favorite troll. Searching brighton36 and Factom will yield more information about our project than nearly any other you might use. This idea of selling "checksums" is his current favorite smear, but it is of course obvious nonsense.
kolanos 11y ago
Ripple Labs [0] have been trying to do something like this since 2011. From what I can tell, it has been a hard sell. [0] http://www.ripple.com http://www.ripple.com

101 points by dankohn1 11y ago

pilatesfordogs 11y ago

Does anyone have a link to a simplistic explanation of the block chain and why it seems to be so relevant?

joeyspn 11y ago
A bit long, but probably the best explanation you can find out there... https://www.youtube.com/watch?v=sE7998qfjgk https://www.youtube.com/watch?v=sE7998qfjgk
macns 11y ago
blockchain aims to solve the "Two Generals' Problem"[0] short explanation in video[1] On what the article says, transactions not relying on the first bitcoin blockchain are more vulnerable to 51% attacks[2]. Though if that many big corps joined, they could achieve a well established, attack-proof consensus relatively fast - - this probably is bad news[3] for Bitcoins' blockchain "ambitions" which is considered by many a solution to de-centralize the "internet" or services depending on third parties. [0] In computing, the Two Generals Problem, is a thought experiment meant to illustrate the pitfalls and design challenges of attempting to coordinate an action by communicating over an unreliable link: https://en.wikipedia.org/wiki/Two_Generals%27_Problem https://en.wikipedia.org/wiki/Two_Generals%27_Problem [1] https://www.youtube.com/watch?v=sYduOfRLHq0 https://www.youtube.com/watch?v=sYduOfRLHq0 [2] https://en.bitcoin.it/wiki/Weaknesses#Attacker_has_a_lot_of_computing_power https://en.bitcoin.it/wiki/Weaknesses#Attacker_has_a_lot_of_... EDIT: format, clarification UPDATE: [3] just saw the linux foundation page, this might actually be a good thing, forgive my ignorance
- sanswork 11y ago
  >blockchain aims to solve the "Two Generals' Problem"[0] short explanation in video[1] PoW aims to solve that. Blockchains are just a way to store data in an agreed format with immutability and known ordering. >On what the article says, transactions not relying on the first bitcoin blockchain are more vulnerable to 51% attacks 51% attacks are an issue for PoW systems. Private chains don't need PoW so aren't vulnerable to them.
  - brighton36 11y ago
    Private chains are also trivially compromised. Much more so than a traditional database
    - sanswork 11y ago
      Please share with the class how?
      - brighton36 11y ago
        Look into nxt, peercoin, a few of the other pos chains. They all failed due to stake grinding. read the poelstra papers for why pos is untenable
        sanswork 11y ago
        When you know every participant you don't need PoS or PoW you can us RR. Like I've said elsewhere you are arguing from ignorance and because you've bought into the religion of bitcoin.
        brighton36 11y ago
        Round robin is trivially DOS'd . also, sharing your private finance data with your competitors is not an economic efficiency. Bitcoin isnt good for very much, it's mostly just useful for value transmission and censorship resistance. You're new to blockchains and don't know that, so you intend to blockchain all the things. Which is a way more extreme view.
        sanswork 11y ago
        How is it trivially DOS'd? You don't need to share all your private data just the data about transfers using the system which isn't going to be particularly sensitive unless you are in a bad way financially and will be worth it to minimize the amount of settlements required of your business. I'm new to blockchains? I'm pretty sure I'm not.
brighton36 11y ago
It's a buzzword, its a database, but with better marketing behind it.

jordigh 11y ago

So what is going to replace miners? What incentive will people have to verify the integrity of this new blockchain? Is it still vulnerable to 51% attacks?

joeyspn 11y ago
https://en.wikipedia.org/wiki/Proof-of-stake https://en.wikipedia.org/wiki/Proof-of-stake ?
- dacox 11y ago
  https://en.bitcoin.it/wiki/Altcoin#Proof_Of_Stake https://en.bitcoin.it/wiki/Altcoin#Proof_Of_Stake Because these attacks exists, including Peercoin[3] and Blackcoin[4] proof of stake cryptocurrencies have "master" public keys that control the blockchain. I wonder who would control that ;) This class of cryptocurrency is either insecure or centralized, however proof of stake (based on a PoW currency) is useful in some systems because gaining stake is costly, but it isn't workable for bootstrapping distributed consensus. This would be an interesting though experiment. If they implemented proof of stake based on a proof of work currency, like Bitcoin, what would happen if the new currency took off and Bitcoin started to die? Now there's a threat model that requires unmotivated miners to still secure the network, both networks.
dacox 11y ago
The pessimist in me says nothing, but we'll see.
wmf 11y ago
https://www.stellar.org/blog/stellar-consensus-protocol-proof-code/ https://www.stellar.org/blog/stellar-consensus-protocol-proo... ? But seriously, "OBC currently offers two implementations of PBFT (Practical Byzantine Fault Tolerant) consensus, as a means to validate transactions".
sanswork 11y ago
When you know the participants PoW is just a waste. You can use something like round robin to determine who gets to add the next block. That means that no it's not.

yarrel 11y ago

Jettisoning any advantage to using the blockchain rather than a centralised database. This is the snake oil phase of cryptocurrency. Or, more charitably, the not-inhaling phase.

mpeg 11y ago
There are a lot of misunderstandings about blockchain technology. One of the most common is believing that everyone who uses their own chains are not using the bitcoin Blockchain, which is usually not the case (apart from some notable examples like Ripple or Ethereum), you can use the Blockchain with marked bitcoins or other mechanisms to essentially "convert" them to other currencies in a provable way. Another is that everything that needs to be distributed should be done in blockchains, whether there is trust between peers or not.

nissimk 11y ago

Here is the press release: http://www.linuxfoundation.org/news-media/announcements/2015/12/linux-foundation-unites-industry-leaders-advance-blockchain http://www.linuxfoundation.org/news-media/announcements/2015... And the website: https://blockchain.linuxfoundation.org/ https://blockchain.linuxfoundation.org/ Please post if there is any more information.

deleted 11y ago
[deleted]
sa5 11y ago
There are some more technical details at https://www.ibm.com/developerworks/community/blogs/gcuomo/entry/The_Force_of_Blockchain_Awakens?lang=en https://www.ibm.com/developerworks/community/blogs/gcuomo/en...

logfromblammo 11y ago

"Ditching" Bitcoin? Wouldn't that imply that they had previously adopted Bitcoin to some meaningful extent? Bitcoin is merely proof of concept for the underlying technology. I expect that there will be many more offshoots in the future, beyond the pieces used by the existing banking system. But I won't really care about any of them, until one of them allows me to work, buy, and sell without being forced to trust any third party that I find to be intrinsically untrustworthy--including governments, banks, cartel enforcers, mobsters, miner brigades, and Anonymous. Not there yet. This isn't even a step in that direction. But what I do like about this is that it may have the potential to simplify mutual insurance, interbank settlement, and securities exchanges. It would be nice if the funds from an electronic transfer to my spouse could be made available faster than writing out a paper check and depositing it at a branch ATM. I would also be particularly interested if it could end certain semi-fraudulent practices, such as short positions that are not appropriately matched against a long counterparty, or speculative phantom commodities contracts that are never actually redeemed by delivery.

fapjacks 11y ago
Nice username, bub!
jsprogrammer 11y ago
I don't see what advantage an offshoot would have. The current blockchain is the longest; there's no reason to ditch it.
- logfromblammo 11y ago
  No reasons? The nature of the Bitcoin's SHA-256 POW means that individuals can no longer meaningfully contribute to the integrity of the chain, and this responsibility is increasingly held by fewer individuals with access to (relatively) expensive specialized ASIC machines. The Bitcoin system has (relatively) few legit trade opportunities yet, but is well used by scammers and black marketeers. The median person has little use for Bitcoin as it is now. MtGOX showed that exchanges are a point of vulnerability. Silk Road seizure showed that Bitcoin is vulnerable to rubber-hose cryptanalysis and reminded everyone it is only pseudoanonymous. Governments have already moved to attack Bitcoin or users of Bitcoin. Mostly these are proactive attempts to defend domestic currency controls, or concerns over money laundering. The "dust DoS" attacks have called into question whether Bitcoin can scale much larger than its current extent. You can't use Bitcoin with Apple Pay or Google Wallet. You actually can't get an app approved for Apple's App Store if it includes the ability to send Bitcoin. Google play doesn't allow in-app purchases in Bitcoin. There's no reason to ditch it if you have already adopted it, but there's also no particular reason to adopt it in the first place, if something better might come along within a year or two. The banks aren't buying in. I haven't either.

macns 11y ago

Reading the participants' comments below the announcement, most of them speak of an open/distributed ledger, not Bitcoin's blockchain. So it seems they really are ditching the original blockchain. IBM intends to contribute tens of thousands of lines of its existing codebase and its corresponding intellectual property to this open source community. Digital Asset is contributing the Hyperledger mark, which will be used as the project name, as well as enterprise grade code and developer resources. R3 is contributing a new financial transaction architectural framework designed to specifically meet the requirements of its global bank members and other financial institutions. These technical contributions, among others from a variety of companies, will be reviewed in detail in the weeks ahead by the formation and Technical Steering Committees.

malandrew 11y ago
"enterprise grade code" What does that even mean? I read that and think to myself "cowboy generated spaghetti code with more bugs and more technical debt".
- ethbro 11y ago
  > IBM... "enterprise grade code" Java.
- l3m0ndr0p 11y ago
  Outsourced
- mikekchar 11y ago
  Without being sarcastic, I think it means scalable so that it can be deployed in a situation where you have tens of thousands of seats. Generally it also means that you have some way of monitoring that it is working across the network. Finally, it usually means that it is an integrated turnkey system that doesn't require you to separately install and maintain a lot of third party support systems that it depends on. You can think of the opposite of "enterprise" software as realizing that if you use independent packages a,b, and c and tie them together with some shell script that it will do what you want. It's only been tested by one or two guys, but you can't see any reason why it wouldn't work for the 10,000 people on your site (famous last words...). You spend a week patching it together and roll it out on the weekend with no way to roll back if it doesn't work, etc. Still not a fan of enterprise software, but I don't work for enterprise companies any more ;-)

malandrew 11y ago

I just hope that any solution adopted doesn't aid or reinforce cartel-like behavior. We already have a financial system where the incumbents can easily block the entrance of a new, nimbler upstart that would disrupt existing institutions and increase productivity. The article even mentioned at least one existing institution that has an incentive to preserve the problem to which they are the solution: "Indeed, some companies involved in the project may feel threatened by existing efforts to reinvent the financial markets with the blockchain. State Street bank, for instance, stands to lose if companies start using Overstock’s technology to borrow stock. In the US, the stock loan business is a $954 billion market; State Street, known as an agent lender, is a big part of that. Its future depends on getting ahead of the game. Relevant: "The Shirky Principle" by Kevin Kelly http://kk.org/thetechnium/the-shirky-prin/ http://kk.org/thetechnium/the-shirky-prin/

SoyNut 11y ago

entrepreneur: "About your open blockchain project, sir." IBM PR correspondent: "Yes, what about?" entrepreneur: "Well, it's closed source. I don't see public repositories anywhere for it." IBM PR correspondent: "No it's not closed source! It's just not available to you or anyone who doesn't have access to our network. Just ask our business partners if it's open." The Linux Foundation: "Of course it's open! Open to US!"

nissimk 11y ago
Here's the github link :-) https://github.com/hyperledger/hyperledger https://github.com/hyperledger/hyperledger TLDR: there's no code in that repo.
stymaar 11y ago
Richard Stallman approves ;)

DennisP 11y ago

It makes sense for the banks to do this, because they have different requirements. Bitcoin is great because it works with an unknown set of untrusted entities, and there's no counterparty risk because the ledger is the currency. Banks have a known set of semi-trusted entities, and want to track off-chain assets. They'll still have counterparty risk, but if they see a way to use chained blocks and something like Byzantine Paxos to speed up interbank settlement, more power to 'em.

paulhodge 11y ago
Yup. The actors don't even need to trust each other that much, because they each still need to use their public key to execute a transation. The level of trust is just that everyone will play nicely, such as not purposefully ignoring transactions. The Bitcoin model is good at incentivizing actors to play nicely. Banks have no need to create this incentive, it's already in their interest. The Bitcoin mining system also solves another problem: how to evenly distribute new money in a fair way. Banks have no need for that either.
- Mtinie 11y ago
  > The Bitcoin mining system also solves another problem: how to evenly distribute new money in a fair way. I was going to disagree with this, but I reconsidered my initial comment and will offer this modification: "The Bitcoin mining system also solves another problem: how to evenly distribute new money in a provably fair way to those with the resources to participate."
- stymaar 11y ago
  > The Bitcoin mining system also solves another problem: how to evenly distribute new money in a fair way. That is not the problem that mining is addressing. Mining is an incentive for people spending resources to check the integrity of the blockchain. This has nothing to do with «fairness».
mbgaxyz 11y ago
Yep. Here's an example of creating a private blockchain, issuing and sending assets (all in 90 seconds). https://makebitcoingreatagain.wordpress.com/2015/11/26/create-a-private-blockchain-in-90-seconds/ https://makebitcoingreatagain.wordpress.com/2015/11/26/creat...

ubersync 11y ago

This is just a glorified DBMS.

nickpsecurity 11y ago
Append-only, distributed, fault-tolerant filesystem + standard, financial protocols anyone?

ihsw 11y ago

It should be noted that there is a far more interesting implication -- tech and banking giants ditch SWIFT for their own blockchain. The blockchain and SWIFT are very similar in spirit and in actuality, and it stands to reason that there is consensus that a private blockchain network would be more robust, fast, and secure than SWIFT.

nickpsecurity 11y ago
My thoughts exactly given I've designed, but not developed, tech specifically aiming to replace SWIFT. What they do need not cost so much or be so difficult. I was thinking highly secure endpoints and link encryptors to authenticate otherwise P2P traffic with optional 3rd party involvement where extra accountability is needed.
joveian 11y ago
I don't know how financial stuff works and hadn't heard of SWIFT, but searching came up with an announcment of them joining this effort: http://www.swift.com/about_swift/shownews?param_dcr=news.data/en/swift_com/2015/PR_SWIFT_LINUX.xml http://www.swift.com/about_swift/shownews?param_dcr=news.dat...

roymurdock 11y ago

For anyone who needs a (very simplified) primer on the blockchain and why it's relevant for banks: A blockchain is a ledger (piece of paper that records transactions) with perfect memory of every single transaction that has ever occurred within a certain network. This makes double spending within the network impossible as you can trace every single coin in the network back to its origin, verifying that your trading partner does, in fact, have the coin he claims to. This removes the need for a trusted third party to oversee/verify transactions. This is important for banks because currently they pay a 3rd party clearing house to process transactions and transfers between them. They cannot trust each other because their transactions are not linked together in one shared network. If they all agree to get on a shared blockchain (ledger), they can split the costs of continuously verifying the validity of the blockchain (leder) between them, rather than paying a 3rd party for the same service. This would reduce fees within the industry and reduce time between transfers. I used to be very excited about blockchain technology and its implications for creating micro/private currency networks. Something about the financial industry's interest has really turned me off the blockchain and its possible implementations.

johndevor 11y ago
> Something about the financial industry's interest has really turned me off the blockchain and its possible implementations. What exactly? And don't you think banks will be more apt to use Bitcoin once things like the lightning network roll out (offering much greater transaction volumes)?
- roymurdock 11y ago
  I think I was turned off because I envisioned a much grander future for blockchain tech than a glorified clearinghouse for big banks. Banks will never use a public network (like Bitcoin) to manage inter-bank transfers. They'll take the underlying technology and create a custom, private network where they can tweak protocols to their liking. The hard part will be for the banks to form a board to oversee the network, because they'll each have to contribute members and those members will have to work together and trust each other not to make sneaky or unfavorable changes to the underlying codebase of the private network. There will be lots of politics based on relative bank size and power within the network. Should be interesting to see how it plays out.

rburhum 11y ago

This makes sense. What bank would want to have a public ledger effectively advertising their customer data?

deleted 11y ago

[deleted]

mpeg 11y ago

Both Nasdaq omx [0] and Overstock t0.com [1], mentioned in the article, seem to use the Bitcoin Blockchain to peg their internal currency against, they're sidechains, not completely separate blockchains... [0]: https://coincenter.org/wp-content/uploads/2015/06/SecondLetterForRecord-AB1326.pdf https://coincenter.org/wp-content/uploads/2015/06/SecondLett... [1]: http://www.sec.gov/Archives/edgar/data/1130713/000104746915008523/a2226515zs-3a.htm http://www.sec.gov/Archives/edgar/data/1130713/0001047469150...

kanzure 11y ago
Timestamping isn't enough to make something a sidechain: https://blockstream.com/sidechains.pdf https://blockstream.com/sidechains.pdf ... unless you are using "sidechain" in a very loose, diluted sense.
- mpeg 11y ago
  I guess you mean the t0.com chain, I do agree it's not the common case where you can transfer btc in and out of the sidechain. Would it be considered a completely separate chain, since it needs to publish the timestamped hashes on the bitcoin blockchain ? (Or any other, sure, but right now bitcoin is the one with the widest adoption)

Zigurd 11y ago

The regulators get friendly relations with the regulated, and the regulated get to decide how much cryptocurrency they get to skim because they started another blockchain that's friendly to regulators. A crony cryptocurrency. The bet is that regulators will be more comfortable with an indirectly captive blockchain and will use it as a wedge to lever bitcoin out of banking.

mkj 11y ago

So this is more like a git/mercurial chained hash where the head hash proves the existence of all previous revisions? Makes sense. And call it "blockchain" just to keep enough buzzwords.

DennisP 11y ago
That plus some kind of consensus algorithm. Proof-of-work prevents Sybil attacks when you don't know who anybody is, but if you have known entities you can use more efficient mechanisms.
sanswork 11y ago
So this is just a chain of blocks that each verify the existence of all previous blocks? I can't believe they are calling it a block chain. Clearly it's a chained hash.
brighton36 11y ago
Yep, exactly

mongol 11y ago

The Economist article on this I found good. "The notion of shared public ledgers may not sound revolutionary or sexy. Neither did double-entry book-keeping or joint-stock companies. Yet, like them, the blockchain is an apparently mundane process that has the potential to transform how people and businesses co-operate. Bitcoin fanatics are enthralled by the libertarian ideal of a pure, digital currency beyond the reach of any central bank. The real innovation is not the digital coins themselves, but the trust machine that mints them—and which promises much more besides." http://www.economist.com/news/leaders/21677198-technology-behind-bitcoin-could-transform-how-economy-works-trust-machine http://www.economist.com/news/leaders/21677198-technology-be...

brighton36 11y ago
This article was a PR release for factom which is an obvious scam (they sell checksums). Notarization for the underserved is not a real idea.
- paulsnx2 11y ago
  Brighton36 is Factom's favorite troll. Searching brighton36 and Factom will yield more information about our project than nearly any other you might use. This idea of selling "checksums" is his current favorite smear, but it is of course obvious nonsense.

kolanos 11y ago

Ripple Labs [0] have been trying to do something like this since 2011. From what I can tell, it has been a hard sell. [0] http://www.ripple.com http://www.ripple.com