4 ms·

No mention of cross-currency payments/settlement which, given how Bitcoin is currently being used, is more relevant than bank transfers within the same country.

No mention of cross-currency payments/settlement which, given how Bitcoin is currently being used, is more relevant than bank transfers within the same country. An overview of CLS is a good starting point: http://www.snb.ch/en/mmr/reference/continuous_linked_settlement/source http://www.snb.ch/en/mmr/reference/continuous_linked_settlem...

ryanjshaw 13y ago
Not just cross-currency, but also cross-border payments. I've implemented processing of cross-border payment instructions delivered via SWIFT and there's no way banks will STP a cross-border payment for $150 million. Large payments will always be subject to an authorisation review, at least where I work. That costs money and takes time. Fundamentally, cash payments will always suffer from counterparty default risk without a central bank. How are you going to build an international central bank or central bank system? The best you'll see are regional efforts like TARGET2. Digital currencies solve these problems without requiring ridiculous amounts of infrastructure to be created first. If we had to sit around waiting for banks to solve these problems, it would simply never happen. This is fundamentally why I see digital currencies as the future, and why the hype is indeed warranted (even if perhaps people don't understand why).
- ma2rten 13y ago
  At least in the near future I also don't see how can you can convert $150m worth of bitcoins into 'real' money.
  - jasonlingx 13y ago
    Bitcoin will become real money
    - eriksank 13y ago
      In order to protect our holdings in Bitcoin, we need to find a way to get the Chinese to finally do that thermonuclear strike on Fort Meade, Maryland. We all know that the Chinese have re-targetted their thermonuclear warheads already and that they are on sharp. I wonder why they still hesitate to finally press that button? Are they still waiting for another provocation? Press that button already, will you!
gendal 13y ago
Hi there, Richard Brown here - the author of the linked article. Very good point re FX and CLS. I wanted to make the article as simple as possible so as to bring out the fundamental concepts (correspondent banking, deferred net settlement, real-time gross settlement, etc). In so doing, I had to make some gross simplifications and omissions - the most obvious being ignoring FX but I also made a sleight of hand by implying that banks within a country use the correspondent arrangement I outlined. However, I hope - even with these simplifications - the concepts came across clearly. Thanks for taking the time to comment. Richard
- jackgavigan 13y ago
  I am instinctively against over-simplification of this sort of thing because, in my experience, the devil is in the detail and a little knowledge is a dangerous thing.
  - gendal 13y ago
    Well, I certainly hope nobody tries to build a system off the back of that blogpost! But I think there is a lot to be said for helping people build useful mental models. My experience is that people either have no mental model for how money moves or have models that are just wrong. So anything we can do to impart some insight has to be a good thing.... but you're right: a little knowledge can be very dangerous :-)
  - scott_s 13y ago
    "Education is a series of small lies." - my intro to computer engineering professor upon telling us that some gates are ternary I don't see any other way to teach ideas than to start simple, help provide intuition for the basic concepts, and build from there.
  - Pitarou 13y ago
    We are all against OVER-simplification. I think what you meant to say was: "This article wasn't in-depth enough for me." Maybe you should ask the author to add some further-reading references to the article?
- 13y ago

ryanjshaw 13y ago

Not just cross-currency, but also cross-border payments. I've implemented processing of cross-border payment instructions delivered via SWIFT and there's no way banks will STP a cross-border payment for $150 million. Large payments will always be subject to an authorisation review, at least where I work. That costs money and takes time. Fundamentally, cash payments will always suffer from counterparty default risk without a central bank. How are you going to build an international central bank or central bank system? The best you'll see are regional efforts like TARGET2. Digital currencies solve these problems without requiring ridiculous amounts of infrastructure to be created first. If we had to sit around waiting for banks to solve these problems, it would simply never happen. This is fundamentally why I see digital currencies as the future, and why the hype is indeed warranted (even if perhaps people don't understand why).

ma2rten 13y ago
At least in the near future I also don't see how can you can convert $150m worth of bitcoins into 'real' money.
- jasonlingx 13y ago
  Bitcoin will become real money
  - eriksank 13y ago
    In order to protect our holdings in Bitcoin, we need to find a way to get the Chinese to finally do that thermonuclear strike on Fort Meade, Maryland. We all know that the Chinese have re-targetted their thermonuclear warheads already and that they are on sharp. I wonder why they still hesitate to finally press that button? Are they still waiting for another provocation? Press that button already, will you!

gendal 13y ago

Hi there, Richard Brown here - the author of the linked article. Very good point re FX and CLS. I wanted to make the article as simple as possible so as to bring out the fundamental concepts (correspondent banking, deferred net settlement, real-time gross settlement, etc). In so doing, I had to make some gross simplifications and omissions - the most obvious being ignoring FX but I also made a sleight of hand by implying that banks within a country use the correspondent arrangement I outlined. However, I hope - even with these simplifications - the concepts came across clearly. Thanks for taking the time to comment. Richard

jackgavigan 13y ago
I am instinctively against over-simplification of this sort of thing because, in my experience, the devil is in the detail and a little knowledge is a dangerous thing.
- gendal 13y ago
  Well, I certainly hope nobody tries to build a system off the back of that blogpost! But I think there is a lot to be said for helping people build useful mental models. My experience is that people either have no mental model for how money moves or have models that are just wrong. So anything we can do to impart some insight has to be a good thing.... but you're right: a little knowledge can be very dangerous :-)
- scott_s 13y ago
  "Education is a series of small lies." - my intro to computer engineering professor upon telling us that some gates are ternary I don't see any other way to teach ideas than to start simple, help provide intuition for the basic concepts, and build from there.
- Pitarou 13y ago
  We are all against OVER-simplification. I think what you meant to say was: "This article wasn't in-depth enough for me." Maybe you should ask the author to add some further-reading references to the article?
13y ago