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Yes, there's no 100% trust of course, but the banks, merchants and general population trust other banks more than they would trust some random entities or bitco
by ChemicalWarfare 10y ago
Yes, there's no 100% trust of course, but the banks, merchants and general population trust other banks more than they would trust some random entities or bitcoin exchanges for example.
There are of course reasons for that, the major ones being the shared (and regulated) clearing system you're referring to (which I'm assuming this "bitcoin alternative" is aiming to replace) and then there's the fact that these are accredited financial institutions with reasonable controls in place to keep them honest.
In a hypothetical scenario where credit card authorization succeeds (meaning that the issuing bank is guaranteeing the funds to the merchant), merchant ships the goods but the funds don't make it to their account on the merchant bank side because the issuing bank "misrepresented the position" - if the issuing bank gets caught doing this they'll be in all sorts of trouble.
- pzone 10y agoIt's not that just about having an inherent distrust of one another. When they do have a dispute, it is necessary to have very good documentation to bring to court. Legally doing a mediocre job with keeping records is barely better than not keeping records at all. So they end up spending a lot to mind their p's and q's, even though they do have a good amount of trust. With a blockchain it becomes cheap to add a layer of ex-post verifiable mutual agreement between mostly-trusted parties.
- ChemicalWarfare 10y agoI'm all for a blockchain (or ripple or whatever) type solution replacing today's antiquated setup. My point however is that I highly doubt that it's the trust issues between financial institutions that is the primary driving force behind this implementation.