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> 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

> 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.
- forgotmysn 11y ago
  sounds like a job for Dee Hook! [0] http://www.fastcompany.com/27333/trillion-dollar-vision-dee-hock http://www.fastcompany.com/27333/trillion-dollar-vision-dee-...
- zik 11y ago
  I doubt their private blockchain will work for the very same reason they want a private blockchain - they're not trustworthy. The bitcoin blockchain is secured by the large number of disparate people mututally checking the system. When it's just banks involved the number of players is reduced by many orders of magnitude and it becomes very much easier to game the system. The incentive to steal large amounts of money is high and the security is relatively low. What could possibly go wrong?
  - sanswork 11y ago
    How would you steal large amounts of money on a private chain?
    - nostrademons 11y ago
      Add a new transaction to the end of the chain saying that counterparty X has paid you $1B. Publish this transaction. Counterparty X, of course, publishes a version of the blockchain where you have paid them $1B dollars. How do participants in a private blockchain determine which published version represents reality? Or alternatively: Pay counterparty X $1B. Then immediately turn around and pay counterparty Y the same $1B, before they've gotten an updated ledger from counterparty X. When counterparty X and Y share their ledgers, who owns your $1B? The point of mining in Bitcoin is to resolve conflicts like this. By forcing whichever node digitally signs the latest block to perform a computationally-intensive problem, it represents that the latest block is the consensus of a majority of the network, as measured by computing power. Any node is free to publish a fraudulent block, but then any other node can inspect the block, see that the SHA256 hash doesn't match, and then reject it. Or if they get lucky and happen to find the right SHA256 hash, they will get outpaced on the next block (the Bitcoin protocol specifies that clients should assume the longest chain is correct), and the rest of the network will ignore their fraudulent transaction. What's the alternative in private blockchains? I'm genuinely curious; I have little invested in Bitcoin, but I did spend some time understanding how the protocol works and why it includes the features it does.
      - sanswork 11y ago
        In example 1 you would have to forge a signed transaction to do that. Otherwise Bitcoin miners could just steal everyone's coins. For 2 in a rr system you wouldn't be able to submit 2 blocks in a row

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.

forgotmysn 11y ago
sounds like a job for Dee Hook! [0] http://www.fastcompany.com/27333/trillion-dollar-vision-dee-hock http://www.fastcompany.com/27333/trillion-dollar-vision-dee-...
zik 11y ago
I doubt their private blockchain will work for the very same reason they want a private blockchain - they're not trustworthy. The bitcoin blockchain is secured by the large number of disparate people mututally checking the system. When it's just banks involved the number of players is reduced by many orders of magnitude and it becomes very much easier to game the system. The incentive to steal large amounts of money is high and the security is relatively low. What could possibly go wrong?
- sanswork 11y ago
  How would you steal large amounts of money on a private chain?
  - nostrademons 11y ago
    Add a new transaction to the end of the chain saying that counterparty X has paid you $1B. Publish this transaction. Counterparty X, of course, publishes a version of the blockchain where you have paid them $1B dollars. How do participants in a private blockchain determine which published version represents reality? Or alternatively: Pay counterparty X $1B. Then immediately turn around and pay counterparty Y the same $1B, before they've gotten an updated ledger from counterparty X. When counterparty X and Y share their ledgers, who owns your $1B? The point of mining in Bitcoin is to resolve conflicts like this. By forcing whichever node digitally signs the latest block to perform a computationally-intensive problem, it represents that the latest block is the consensus of a majority of the network, as measured by computing power. Any node is free to publish a fraudulent block, but then any other node can inspect the block, see that the SHA256 hash doesn't match, and then reject it. Or if they get lucky and happen to find the right SHA256 hash, they will get outpaced on the next block (the Bitcoin protocol specifies that clients should assume the longest chain is correct), and the rest of the network will ignore their fraudulent transaction. What's the alternative in private blockchains? I'm genuinely curious; I have little invested in Bitcoin, but I did spend some time understanding how the protocol works and why it includes the features it does.
    - sanswork 11y ago
      In example 1 you would have to forge a signed transaction to do that. Otherwise Bitcoin miners could just steal everyone's coins. For 2 in a rr system you wouldn't be able to submit 2 blocks in a row