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> The entire idea of the Bitcoin blockchain is to provide anonymous consensus... >Participants in regulated financial markets are all known, which makes the en

> The entire idea of the Bitcoin blockchain is to provide anonymous consensus... >Participants in regulated financial markets are all known, which makes the entire design of the Bitcoin blockchain moot. My understanding is that one of the major ideas of the Bitcoin blockchain is to solve the Byzantine generals problem, where it's irrelevant whether the participating generals are known. What is relevant is that the generals cannot/do not necessarily trust each other, yet they must still reach consensus. It's the trust issue that's important here, not the pseudonymity that one particular blockchain (Bitcoin's, in this instance) can provide. > The only reason you see NASDAQ playing with such "colored coin" solutions is that there is currently very little expertise in this space in financial institutions, and there is a monumental hype machine behind Bitcoin. I can't read the minds of any NASDAQ VIPs, but I suspect they have more than one reason for experimenting with emerging technologies. Maybe they don't want exposure to counterparty risk such as we find in TFA with regards to DTC/Cede & Co. Or perhaps they're attempting to quantify the tradeoffs in risks among different possession and clearing mechanisms. Or, sure, maybe they're being distracted by the newest hotness. I welcome being proven wrong, but I'd be very surprised that the "monumental hype machine" behind an emerging technology -- whose market cap is less than half of NDAQ's -- is what convinced a group within NASDAQ to consider some use of Bitcoin's blockchain.

murbard2 11y ago
That's a common misconception. Solutions to the Byzantine generals problem have been known for a while. Researchers are still looking for more efficient solutions, but PBFT introduced in 1999 is already, well, practical. The main problem with anonymous consensus are Sybil attacks. You need a way to limit the size of the consensus pool. Bitcoin does that using proof-of-work (quite elegantly, Bitcoin's PoW does actually a lot more than that, but this is really it's raison d'etre). I recommend reading Ben Laurie on the topic. http://www.links.org/files/decentralised-currencies.pdf http://www.links.org/files/decentralised-currencies.pdf --- If you look at the current problem with DTCC, you'll notice is has little to do with centralization, and more to do with the fact that there is no technological transparency. If all of these systems ran with well defined API, most of the issues would go away. What financial are mostly after is a shared ledger with programmatic access. Distributed is just a nice add-on.

murbard2 11y ago

That's a common misconception. Solutions to the Byzantine generals problem have been known for a while. Researchers are still looking for more efficient solutions, but PBFT introduced in 1999 is already, well, practical. The main problem with anonymous consensus are Sybil attacks. You need a way to limit the size of the consensus pool. Bitcoin does that using proof-of-work (quite elegantly, Bitcoin's PoW does actually a lot more than that, but this is really it's raison d'etre). I recommend reading Ben Laurie on the topic. http://www.links.org/files/decentralised-currencies.pdf http://www.links.org/files/decentralised-currencies.pdf --- If you look at the current problem with DTCC, you'll notice is has little to do with centralization, and more to do with the fact that there is no technological transparency. If all of these systems ran with well defined API, most of the issues would go away. What financial are mostly after is a shared ledger with programmatic access. Distributed is just a nice add-on.