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>From a brief glance, it seems that they want to tie as many businesses together as possible into one private blockchain-based network in order to make payment

>From a brief glance, it seems that they want to tie as many businesses together as possible into one private blockchain-based network in order to make payment verification and settlement quicker/more secure. Banks are already looking into this and exploring their own private blockchain network. [1] Hasn't Bitcoin already started such a network? What would be the benefit of a private network? Will banks really be able to bring more computing power (and thus, have the largest chain) than the Bitcoin public?

cbeach 11y ago
Bitcoin has already seen some unfortunate consequences of running on an open network. Chinese mining syndicates hold a significant share of control over the Bitcoin network, and are therefore able to control the destiny of Bitcoin. They decided against the Bitcoin XT fork, for example and stand in the way of its adoption. All democratic, naturally. Possibly a good thing for Bitcoin stability. But can you imagine American banks ceding control of their settlement infrastructure to a network / protocol whose rules could be dictated by China?
- jsprogrammer 11y ago
  If a disagreeable change is made, you can always just fork to a new chain. Are banks scared that the mining syndicates will hunt down and attack their forked chains? What good would that do anybody?
- TD-Linux 11y ago
  The rules can't actually be dictated by the miners - e.g. they can make invalid blocks but clients won't accept them. They can censor transactions, though that can only delay it until a non-colluding miner includes it. The Bitcoin XT chain fork is a bit different in that it explicitly tied itself to miner voting. That's not necessary, you could really tie it to anything.
Nutomic 11y ago
On a private network, you can decide who is allowed to mine new blocks (and also their hashrate). This keeps mining costs low, and means your data stays private. And it means you don't rely on Bitcoin (which I guess might be a big plus for banks).
wmf 11y ago
Handling assets other than BTC is kludgey in Bitcoin. Financial people probably aren't in love with Bitcoin's irrevocable transactions either. Private ledgers generally don't/shouldn't use mining at all, so computing power doesn't matter.
- mbgaxyz 11y ago
  Also smart contracts on top of Bitcoin and Ethereum have some fundamental problems. https://makebitcoingreatagain.wordpress.com/2016/02/10/5-challenges-facing-smart-contracts/ https://makebitcoingreatagain.wordpress.com/2016/02/10/5-cha...
- hybridsole 11y ago
  Why not just use a big SQL database that they all control? What's the difference between that and a private blockchain?
  - sanswork 11y ago
    Youre talking only about the storage which doesn't matter. You still need a system built around the database to handle known ordering of entries and immutability. So you can either hack something together or just use a blockchain which is pretty well understood and simple tech.
  - wmf 11y ago
    There is a continuum of different threat models and solutions, with the big SQL database on one end, the proof-of-work blockchain on the other end, and stuff like Stellar and PBFT in the middle. Unfortunately the field is pretty immature and people tend to pick a solution and then rationalize up a threat model to match.
jbpetersen 11y ago
Bitcoin's blockchain is absurdly expensive to record data on. It's much better suited to only proving data existed by a certain date by recording its hash value. There's also no real benefit to having the largest chain (designing a cryptocurrency specifically to build as large a blockchain as possible would be relatively trivial) or wasting computing power calculating endless streams of pseudo-random numbers. As for benefits of a private network: Privacy, while still being able to easily form consensus of records among all parties involved.

cbeach 11y ago

Bitcoin has already seen some unfortunate consequences of running on an open network. Chinese mining syndicates hold a significant share of control over the Bitcoin network, and are therefore able to control the destiny of Bitcoin. They decided against the Bitcoin XT fork, for example and stand in the way of its adoption. All democratic, naturally. Possibly a good thing for Bitcoin stability. But can you imagine American banks ceding control of their settlement infrastructure to a network / protocol whose rules could be dictated by China?

jsprogrammer 11y ago
If a disagreeable change is made, you can always just fork to a new chain. Are banks scared that the mining syndicates will hunt down and attack their forked chains? What good would that do anybody?
TD-Linux 11y ago
The rules can't actually be dictated by the miners - e.g. they can make invalid blocks but clients won't accept them. They can censor transactions, though that can only delay it until a non-colluding miner includes it. The Bitcoin XT chain fork is a bit different in that it explicitly tied itself to miner voting. That's not necessary, you could really tie it to anything.

Nutomic 11y ago

On a private network, you can decide who is allowed to mine new blocks (and also their hashrate). This keeps mining costs low, and means your data stays private. And it means you don't rely on Bitcoin (which I guess might be a big plus for banks).

wmf 11y ago

Handling assets other than BTC is kludgey in Bitcoin. Financial people probably aren't in love with Bitcoin's irrevocable transactions either. Private ledgers generally don't/shouldn't use mining at all, so computing power doesn't matter.

mbgaxyz 11y ago
Also smart contracts on top of Bitcoin and Ethereum have some fundamental problems. https://makebitcoingreatagain.wordpress.com/2016/02/10/5-challenges-facing-smart-contracts/ https://makebitcoingreatagain.wordpress.com/2016/02/10/5-cha...
hybridsole 11y ago
Why not just use a big SQL database that they all control? What's the difference between that and a private blockchain?
- sanswork 11y ago
  Youre talking only about the storage which doesn't matter. You still need a system built around the database to handle known ordering of entries and immutability. So you can either hack something together or just use a blockchain which is pretty well understood and simple tech.
- wmf 11y ago
  There is a continuum of different threat models and solutions, with the big SQL database on one end, the proof-of-work blockchain on the other end, and stuff like Stellar and PBFT in the middle. Unfortunately the field is pretty immature and people tend to pick a solution and then rationalize up a threat model to match.

jbpetersen 11y ago

Bitcoin's blockchain is absurdly expensive to record data on. It's much better suited to only proving data existed by a certain date by recording its hash value. There's also no real benefit to having the largest chain (designing a cryptocurrency specifically to build as large a blockchain as possible would be relatively trivial) or wasting computing power calculating endless streams of pseudo-random numbers. As for benefits of a private network: Privacy, while still being able to easily form consensus of records among all parties involved.