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And yet, banks and financial institutions are vastly preferring blockchains that have been uniquely developed for their needs. There's very little appeal in sim

by chiaro 9y ago

And yet, banks and financial institutions are vastly preferring blockchains that have been uniquely developed for their needs. There's very little appeal in simply accepting the transaction costs and times in bitcoin when you can spin up a version with whatever spec and interoperability you desire. If by 'return of capital' you mean a propensity for an asset to retain its value, bitcoin is utterly inappropriate. Even gold is far too volatile and is only rationalised on those grounds against (very) long tail risk.

stale2002 9y ago
Well sure. Banks prefer blockchains because it provides the properties of a SQL database that everyone syncs up with. And this complicated, sql database by another name is vastly vastly preferable to the stuff that banks are doing now. Yes, the fact that blockchains act as a public database is way way better than the outdated stuff that banks spend billions of dollars on. But it is still not the 'innovative' and interesting part of blockchains.
vzcx 9y ago
Their "preference" for "blockchain" is borne out of political necessity. I say this not to trivialize it, but to explain. Banks are massive, massive institutions, and it is hard enough to coordinate people and resources within them, much less across them. Back-office operations are indeed cumbersome and a major cost-center, and there is much value to be captured in simplifying all of it. If "blockchain" can serve a Schelling point to help get right people in these institutions to talk with one another so as to get on the same page, then there's a chance that some progress can be made towards solving these problems. It's "blockchain" because "blockchain" is the new hotness, that's all. Any real world, inter-dealer distributed ledger will, in all practicality, be more like a cluster of SQL databases backing some kind of state-machine replication protocol than a cryptocurrency. Happy BTC10k, by the way.

by chiaro 9y ago

stale2002 9y ago

Well sure. Banks prefer blockchains because it provides the properties of a SQL database that everyone syncs up with. And this complicated, sql database by another name is vastly vastly preferable to the stuff that banks are doing now. Yes, the fact that blockchains act as a public database is way way better than the outdated stuff that banks spend billions of dollars on. But it is still not the 'innovative' and interesting part of blockchains.

vzcx 9y ago

Their "preference" for "blockchain" is borne out of political necessity. I say this not to trivialize it, but to explain. Banks are massive, massive institutions, and it is hard enough to coordinate people and resources within them, much less across them. Back-office operations are indeed cumbersome and a major cost-center, and there is much value to be captured in simplifying all of it. If "blockchain" can serve a Schelling point to help get right people in these institutions to talk with one another so as to get on the same page, then there's a chance that some progress can be made towards solving these problems. It's "blockchain" because "blockchain" is the new hotness, that's all. Any real world, inter-dealer distributed ledger will, in all practicality, be more like a cluster of SQL databases backing some kind of state-machine replication protocol than a cryptocurrency. Happy BTC10k, by the way.