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"So you'll still have to deal with the absurd notion of holidays and weekends when working with bank transfers." The blockchain works on holidays. Say what you

by mrb 9y ago

"So you'll still have to deal with the absurd notion of holidays and weekends when working with bank transfers." The blockchain works on holidays. Say what you want about Bitcoin and other cryptocurrencies, but the hard truth is that processing transactions 24/7/365 is part of their appeal compared to legacy financial systems, as perfectly illustrated in this example...

hudon 9y ago
A SQL database also works on holidays. The problem with the "legacy financial systems" is not that their technology mysteriously shuts down on holidays, it's that the people do. As soon as they automate clearing house processes, they can also have 24/7/365 transactions, blockchain or not.
- uiri 9y ago
  Doesn't ACH stand for Automated Clearing House? Which part of the process has yet to be automated? Clearly it is poorly named if it isn't fully automated which seems to be the case. It is possible that it is fully automated but because money is important, you need maintenance staff to be available to correct any mistakes.
  - will_hughes 9y ago
    It's automated. It doesn't mean continuously operating. I'd recommend listening to this planet money episode[1] where they describe how the ACH came to be. It's called automated, because it's a step up from the original method of payment processing between banks: handing physical slips of paper between each other. [1] http://www.npr.org/sections/money/2013/10/04/229224964/episode-489-the-invisible-plumbing-of-our-economy http://www.npr.org/sections/money/2013/10/04/229224964/episo...
    - sizzle 9y ago
      Thanks for the link
- colordrops 9y ago
  Except cryptocurrencies have a nice feature in that it is not possible to shut down on holidays unlike a SQL db.
wott 9y ago
Another blockchain solutionist in search of a problem to solve. Finland, 15 years ago: free bank transfers from individual to individual, money appears on the bank account of the recipient in a matter of minutes or even just seconds, including the time it takes for him to check on the cash dispenser interface or the bank website. Regular average Joes' banks. No blockchain in sight.
- hanklazard 9y ago
  I've been thinking that bank transaction reconciliation is one of the best use-cases for DLT. No need for a crypto coin, each financial institution could just hold a ledger copy. R3's Corda is being built to plug in directly to legacy SQL systems, and its founders have lots of experience in finance. If anyone is interested, I found this epicenter podcast interview really interesting: https://youtu.be/3YTSwB5UrEI https://youtu.be/3YTSwB5UrEI
- mrb 9y ago
  Sigh... I never said the problem can be solved only by a blockchain. But the problem does exist in some countries and the blockchain does solve it. Also the problems of the Finnish system that cryptocurrencies solve are obvious: your system has low-ish daily/monthly limits, and your system only works with 0.05% of the world's population (namely those with a Finnish bank account). In an era of European and international trade, that is ridiculous.
  - dsacco 9y ago
    But why use a blockchain instead of a SQL database? What concrete benefits does it provide and why do we want those benefits? It's just a data structure, and it's a great one at that, but I really don't see how it fits here.
    - mrb 9y ago
      A blockchain is necessary for decentralization, which brings 3 main benefits: 1 - Censorship resistance. There is what I call big and small censorship. It can be an authoritarian government seizing the bank account of a journal supporting the opposition, or it can take the form of Paypal freezing someone's account for the wrong reasons (a few examples: https://news.ycombinator.com/item?id=1803488 https://news.ycombinator.com/item?id=1803488 or https://www.dailydot.com/layer8/paypal-protonmail-freeze/ https://www.dailydot.com/layer8/paypal-protonmail-freeze/ or https://news.ycombinator.com/item?id=11048131 https://news.ycombinator.com/item?id=11048131). Cryptocurrencies solve this by allowing users to be in absolute control of their cryptocurrency addresses and keys. 2 - Irreversibility of payments. This helps merchants avoid fraudulent credit card chargebacks: once funds are received they are spendable right away. No one can reverse payments. No system other than blockchains offer irreversibility. 3 - Permissionless. You don't need anyone's permission to participate in Bitcoin or other cryptocurrencies. Banks sometimes refuse to let people (especially the poor) open bank accounts. Because they don't have enough for an initial deposit, or have a bad credit history, etc. By contrast, anyone can be a cryptocurrency user as long as they have a $20 Android smartphone.
dsacco 9y ago
Thats's not perfectly illustrated at all...financial institutions have been capable of servicing transactions 24/7/365 for decades now. ACH just doesn't do it, and a blockchain doesn't inherently empower it more than, say, Postgres.
- mrb 9y ago
  "ACH just doesn't do it" ...which is precisely what perfectly illustrates the problem. Users are at the mercy of some arbitrary policy of not processing transactions on weekends & holidays.
  - dsacco 9y ago
    That's not a technical problem, especially because every blockchain proposal for financial institutions is centralized. Until you hit competitive transaction throughput on a blockchain while retaining its decentralized features, it doesn't really free you from being at the whims of other parties. There is no proof of work or proof of stake system that solves this yet.
    - mrb 9y ago
      "That's not a technical problem" That's the point: it's a human problem. And by removing the human element, blockchains solve the problem. Note that I'm taking about decentralized blockchains (Bitcoin, Ethereum...), not the private centralized ones that are being proposed for financial institutions.

by mrb 9y ago

hudon 9y ago

A SQL database also works on holidays. The problem with the "legacy financial systems" is not that their technology mysteriously shuts down on holidays, it's that the people do. As soon as they automate clearing house processes, they can also have 24/7/365 transactions, blockchain or not.

uiri 9y ago
Doesn't ACH stand for Automated Clearing House? Which part of the process has yet to be automated? Clearly it is poorly named if it isn't fully automated which seems to be the case. It is possible that it is fully automated but because money is important, you need maintenance staff to be available to correct any mistakes.
- will_hughes 9y ago
  It's automated. It doesn't mean continuously operating. I'd recommend listening to this planet money episode[1] where they describe how the ACH came to be. It's called automated, because it's a step up from the original method of payment processing between banks: handing physical slips of paper between each other. [1] http://www.npr.org/sections/money/2013/10/04/229224964/episode-489-the-invisible-plumbing-of-our-economy http://www.npr.org/sections/money/2013/10/04/229224964/episo...
  - sizzle 9y ago
    Thanks for the link
colordrops 9y ago
Except cryptocurrencies have a nice feature in that it is not possible to shut down on holidays unlike a SQL db.

wott 9y ago

Another blockchain solutionist in search of a problem to solve. Finland, 15 years ago: free bank transfers from individual to individual, money appears on the bank account of the recipient in a matter of minutes or even just seconds, including the time it takes for him to check on the cash dispenser interface or the bank website. Regular average Joes' banks. No blockchain in sight.

hanklazard 9y ago
I've been thinking that bank transaction reconciliation is one of the best use-cases for DLT. No need for a crypto coin, each financial institution could just hold a ledger copy. R3's Corda is being built to plug in directly to legacy SQL systems, and its founders have lots of experience in finance. If anyone is interested, I found this epicenter podcast interview really interesting: https://youtu.be/3YTSwB5UrEI https://youtu.be/3YTSwB5UrEI
mrb 9y ago
Sigh... I never said the problem can be solved only by a blockchain. But the problem does exist in some countries and the blockchain does solve it. Also the problems of the Finnish system that cryptocurrencies solve are obvious: your system has low-ish daily/monthly limits, and your system only works with 0.05% of the world's population (namely those with a Finnish bank account). In an era of European and international trade, that is ridiculous.
- dsacco 9y ago
  But why use a blockchain instead of a SQL database? What concrete benefits does it provide and why do we want those benefits? It's just a data structure, and it's a great one at that, but I really don't see how it fits here.
  - mrb 9y ago
    A blockchain is necessary for decentralization, which brings 3 main benefits: 1 - Censorship resistance. There is what I call big and small censorship. It can be an authoritarian government seizing the bank account of a journal supporting the opposition, or it can take the form of Paypal freezing someone's account for the wrong reasons (a few examples: https://news.ycombinator.com/item?id=1803488 https://news.ycombinator.com/item?id=1803488 or https://www.dailydot.com/layer8/paypal-protonmail-freeze/ https://www.dailydot.com/layer8/paypal-protonmail-freeze/ or https://news.ycombinator.com/item?id=11048131 https://news.ycombinator.com/item?id=11048131). Cryptocurrencies solve this by allowing users to be in absolute control of their cryptocurrency addresses and keys. 2 - Irreversibility of payments. This helps merchants avoid fraudulent credit card chargebacks: once funds are received they are spendable right away. No one can reverse payments. No system other than blockchains offer irreversibility. 3 - Permissionless. You don't need anyone's permission to participate in Bitcoin or other cryptocurrencies. Banks sometimes refuse to let people (especially the poor) open bank accounts. Because they don't have enough for an initial deposit, or have a bad credit history, etc. By contrast, anyone can be a cryptocurrency user as long as they have a $20 Android smartphone.

dsacco 9y ago

Thats's not perfectly illustrated at all...financial institutions have been capable of servicing transactions 24/7/365 for decades now. ACH just doesn't do it, and a blockchain doesn't inherently empower it more than, say, Postgres.

mrb 9y ago
"ACH just doesn't do it" ...which is precisely what perfectly illustrates the problem. Users are at the mercy of some arbitrary policy of not processing transactions on weekends & holidays.
- dsacco 9y ago
  That's not a technical problem, especially because every blockchain proposal for financial institutions is centralized. Until you hit competitive transaction throughput on a blockchain while retaining its decentralized features, it doesn't really free you from being at the whims of other parties. There is no proof of work or proof of stake system that solves this yet.
  - mrb 9y ago
    "That's not a technical problem" That's the point: it's a human problem. And by removing the human element, blockchains solve the problem. Note that I'm taking about decentralized blockchains (Bitcoin, Ethereum...), not the private centralized ones that are being proposed for financial institutions.