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Each bank/financial institution will probably have its own blockchain for its own purposes. But if they need to make a transaction to another bank's blockchain,
by shepardrtc 9y ago
Each bank/financial institution will probably have its own blockchain for its own purposes. But if they need to make a transaction to another bank's blockchain, they can use the Interledger protocol [1] to do so.
[1] https://interledger.org/ https://interledger.org/
- viraptor 9y agoHere's the point though: if you want to do this, why not have a standard relational database at each bank and a standard for authorised endpoints in each paired bank? This tech was available for decades. Why interledger and blockchains to complicate it?
- DennisP 9y agoYou wouldn't. You use a blockchain when you want one common ledger across multiple companies, and you don't want to pay/trust a single company to manage it. Assuming you know who everyone is, you can use traditional consensus mechanisms like Byzantine Paxos and get much higher transaction rates than public blockchains can do right now.
- canoebuilder 9y agoWith bitcoin, because the participants aren't identified and there isn't any form of traditional trust established between them, there are certain actors in the system that are paid a lot to manage the transactions/blockchain. In your example of multiple companies coordinating on a single blockchain, who would be paid to manage it?
- DennisP 9y agoIt's way cheaper than on Bitcoin because there's no PoW. Each participant would pay to run their own servers that connect to it.
- ucaetano 9y agoYou use a blockchain when you want one common ledger across multiple companies, and you don't want to pay/trust a single company to manage it. Not really, you can have a blockchain managed by a single company. In the most basic definition, a blockchain is simple an authenticated linked sequence of records. It can be public or not, it can be processed centrally, distributed across a single organization, or distributed in a peer-to-peer fashion.
- DennisP 9y agoI guess so but usually people mean something that includes a distributed consensus algorithm.
- viraptor 9y agoWhy would you want a consensus? In what financial situation would you expect the bank to say: this entity says the account has X, but those two entities say it has Y, so I'll accept Y?
- DennisP 9y agoThat's not how blockchain consensus works. Once block number X is finalized, everyone sees the same data in block number X. If a block isn't finalized, and you build a transaction based on particular conditions in that block, and the finalized block has different conditions, then your transaction just fails.
- viraptor 9y ago> everyone sees the same data in block number X The same data in a specific block, but not everyone necessarily agrees that the same block is the latest one. That's why you don't have 100% confidence in a single block confirmation.
- DennisP 9y agoExactly, what I mean by "finalized" is that everyone agrees and there's a very low probability that they'll change their minds.
- viraptor 9y agoAnd until it's not confirmed enough times, the number on your account can effectively change if enough parties agree. You seem to agree with what I wrote so far...
- shepardrtc 9y agoAn optimistic answer would be that blockchains are highly scalable, trustworthy systems of record that provide a number of benefits over a traditional database. A pessimistic answer would be that blockchains are the latest buzz tech.
- canoebuilder 9y agoI like that dichotomous approach, but are those two in balance? What makes it more scalable than a database when a characteristic is a redundancy of copies beyond what would reasonably be needed for sufficient backup? What makes it anymore trustworthy than a database with only trusted actors authorized with write access? The trustful, or verifiable aspects of a blockchain come as a side-effect of independent actors competing for a financial reward. How does one replicate that dynamic in a single organization? Why would one bother trying? a number of benefits over a traditional database A blockchain doesn't provide a number of benefits over a traditional database. A database isn't even a particularly fine-grained description of a blockchain. A blockchain is a key component of an experimental currency inspired by a particular political ideology that is at odds with many aspects of western civilization, such as the benefit of trust in a society. It's not really useful insofar as most people can tell in any other contexts. Even it's usefulness in it's native context is not highly established.
- tzakrajs 9y agoWhy would a bank switch to blockchain internally? What's wrong with the existing ledger?