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The Blockchain Revolution Gets Endorsement in Wall Street Survey

41 points by herendin 11y ago

deleted 11y ago
[deleted]
paulsutter 11y ago
Given that most Bitcoin mining is done behind the Great Firewall[1], what happens if a midlevel bureaucrat partitions the network? (inadvertently or not) Seems there'd be a greater partion behind the firewall, and a lesser partition outside the firewall. How does the protocol deal with that? Assuming it's partitioned for days, weeks, or months? [1] Chun Wang comment from http://comments.gmane.org/gmane.comp.bitcoin.devel/8001 http://comments.gmane.org/gmane.comp.bitcoin.devel/8001 "Ignorant. You seem do not understand the current situation. We suffered from orphans a lot when we started in 2013. It is now your turn. If Western miners do not find a China-based VPN into China, or if Western pools do not manage to improve their connectivity to China, or run a node in China, it would be them to have higher orphans, not us. Because we have 50%+."
- drcode 11y ago
  All it would take is a SINGLE bitcoin user in all of China to figure out a way to sneak 50mb of data a day through the wall to prevent such a network partition.
  - tlrobinson 11y ago
    Indeed, information wants to be free. There is already talk of launching satellites to disseminate block headers (though initially that's more to protect against Sybil attacks than to connect miners) https://groups.google.com/forum/#!forum/bitsat-project https://groups.google.com/forum/#!forum/bitsat-project
- jackgavigan 11y ago
  This is one of the reasons why the Bitcoin Blockchain is not necessarily the best choice as a platform for non-Bitcoin purposes. That's why most of the interest from banks is in blockchain technology - i.e. they're looking at creating their own blockchains.
- patio11 11y ago
  Assuming a complete net split? Then you have chain B in China and B' outside it, each a valid ledger of a different set of transactions. When they're reunited all the transactions only on B' get briefly invalidated as B' nodes reorganize to support the valid chain. (B is more valid than B' because it is presumably longer.). This will likely expose the network to double-spend attacks, where e.g. you take an output spent 2 weeks ago on B' and get a transaction to a B node which moves it internally in your wallet (or to a confederate). This will cause Bitcoin to forget the B' transaction and every subsequent transaction tainted by it. Your goal as the attacker is to have 1+ of these transactions give you economic value prior to your counterparty recognizing the reversal. Good news, though: a net split forking China off Bitcoin would probably result in Bitcoin's central authorities strongly recommending everyone stop processing transactions until they came back.
JohnDoe365 11y ago
Speed trading automated by smart contracts
sjcsjc 11y ago
This is obviously a trivial point, but the word blockchain seems to have lost its definite article. eg (from the linked article): "Last month, Symbiont, which plans to use blockchain to make ..." "Other firms investigating finance-related uses of blockchain ..."
- philrapo 11y ago
  exactly. Wall Street is enamored with distributed databases, i.e. "shared replicated ledgers". Not the specific bitcoin blockchain or cryptocurrency. Blockchain as a term has become a bit like Kleenex. It's just a generic term to describe a distributed database
onion2k 11y ago
Saying you think something is possible is not an endorsement. When Wall Street professionals actually try it, that is an endorse.
patio11 11y ago
The actual Bitcoin network (7 transactions per second maximum worldwide) is insufficiently fast enough to conduct settlement of one player of a stock market simulation trading with 5 bots in a tutorial level. Reports of Wall Street adopting it for settlement purposes seem slightly optimistic.
- rattray 11y ago
  > 7 transactions per second maximum worldwide What is the reason for this? Source?
  - patio11 11y ago
    The Bitcoin "protocol" (for reasoning on the scare quotes search HN for me and that word) allows blocks to get up to 1 MB in size, currently. A block is mined once every ten minutes. The smallest transaction legal in the protocol is ~224 bytes. You can do the math from here. There's a contentious proposal in the community right now to raise the block size and hence the implicit maximum TPS of the network. Why is that contentious? Oh boy, long story.
    - TeMPOraL 11y ago
      I would be interested in hearing that story. Care to describe it, or point towards some reading material? :).
      - nemild 11y ago
        Start here: http://davidsterry.com/blog/2015/06/arguments-in-the-bitcoin-block-size-debate/ http://davidsterry.com/blog/2015/06/arguments-in-the-bitcoin... Also: https://tradeblock.com/blog/bitcoin-network-capacity-analysis-part-1-macro-block-trends https://tradeblock.com/blog/bitcoin-network-capacity-analysi... https://tradeblock.com/blog/bitcoin-network-capacity-analysis-part-2-macro-transaction-trends https://tradeblock.com/blog/bitcoin-network-capacity-analysi... https://tradeblock.com/blog/bitcoin-network-capacity-analysis-part-3-miner-incentives https://tradeblock.com/blog/bitcoin-network-capacity-analysi... https://tradeblock.com/blog/bitcoin-network-capacity-analysis-part-4-simulating-practical-capacity https://tradeblock.com/blog/bitcoin-network-capacity-analysi... https://tradeblock.com/blog/bitcoin-network-capacity-analysis-part-5-stress-test-analysis https://tradeblock.com/blog/bitcoin-network-capacity-analysi... Hit me up if you need more reading.
amalcon 11y ago
I'm not sure I understand the point of using a blockchain in securities trading? I mean, it's not like it would actually have any of the advantages of Bitcoin[1]. You'll still need to settle accounts periodically (transfer money/stock certificates/etc). Those things aren't going to go away. Once the parties need to trust each other for that, they might as well cut costs by pooling money and buying a centralized order-matching system. That is, make exactly the thing they already have today. [1]-I don't think those advantages are all that great either, but that's beside the point. The point is they don't even apply here!
- williamcotton 11y ago
  https://en.wikipedia.org/wiki/Depository_Trust_%26_Clearing_Corporation#Controversy_over_naked_short_selling https://en.wikipedia.org/wiki/Depository_Trust_%26_Clearing_... Once you look in to how we're currently able to clear and settle say stock trades, I think you'll agree that there is some room for improvement not only technically but from a trust perspective.
chollida1 11y ago
> Eighty-four percent of respondents said blockchain could reduce the risk a trade won’t settle and the time that process takes, while 74 percent said it could alleviate the chance your counterparty to a trade won’t make good on the deal. Karma to anyone who can explain this to me. How does the blockchain reduce counterparty risk. The counterparty can either produce the required shares or they can't. And to be honest, currently cash equities settle on a T + 3 days basis and options settle on a T + 1 day basis. Most people view that as a feature not a bug. If the markets wanted instantaneous settlement of cash equities they could do it, no one does.
- blockchin 11y ago
  Any asset can be created on top of the bitcoin with meta-layers such as CounterParty [1] (which is what Symbiont is basing their solution off of) Colored coins [2] or a hybrid approach [3] recently demoed by Deloitte [1] http://counterparty.io/ http://counterparty.io/ [2] http://coloredcoins.org/ http://coloredcoins.org/ [3] http://rubixbydeloitte.com/ http://rubixbydeloitte.com/ (These platforms have received recent backing by NYSE and NASDAQ, respectively) Assets created through Colored coins must use a gateway in a quasi-centralized fashion, however Assets created via counterparty can be traded p2p without a middleman, as they can be natively escrowed by a protocol which enforces atomic swaps and a fair deterministic order matching engine. DTCC's status quo is T+3(days), if there are trades that can be settled on a blockchain, that can be reduced to T+1(hr) or less. IMO Bitcoin is a horribly inefficient trading platform, (aside from the 'advantage' of HFT bots being on equal footing as retail investors) but an ideal settlement/netting/clearing layer. As a minimum there are huge transparency gains to be gleaned. The introduction of Smart contracts potentially opens up the field for a whole new paradigm of smart securities, as well. There are a whole host of established entities researching on blockchain securitization and/or smart contracts at the moment, a subset of them are below: CBW Bank ANZ Westpac Commonwealth Bank of Australia BNY MELLON LHV Bank Barclays UBS Goldman Sachs ABN Amro ING RoboBank SWIFT Santander Standard chartered DBS USAA BBVA KPMG InfoSys Finacle CitiBank DTCC Deutsche Borse Markit EuroCCP CME
  - chollida1 11y ago

41 points by herendin 11y ago

deleted 11y ago

[deleted]

Given that most Bitcoin mining is done behind the Great Firewall[1], what happens if a midlevel bureaucrat partitions the network? (inadvertently or not) Seems there'd be a greater partion behind the firewall, and a lesser partition outside the firewall. How does the protocol deal with that? Assuming it's partitioned for days, weeks, or months? [1] Chun Wang comment from http://comments.gmane.org/gmane.comp.bitcoin.devel/8001 http://comments.gmane.org/gmane.comp.bitcoin.devel/8001 "Ignorant. You seem do not understand the current situation. We suffered from orphans a lot when we started in 2013. It is now your turn. If Western miners do not find a China-based VPN into China, or if Western pools do not manage to improve their connectivity to China, or run a node in China, it would be them to have higher orphans, not us. Because we have 50%+."

drcode 11y ago
All it would take is a SINGLE bitcoin user in all of China to figure out a way to sneak 50mb of data a day through the wall to prevent such a network partition.
- tlrobinson 11y ago
  Indeed, information wants to be free. There is already talk of launching satellites to disseminate block headers (though initially that's more to protect against Sybil attacks than to connect miners) https://groups.google.com/forum/#!forum/bitsat-project https://groups.google.com/forum/#!forum/bitsat-project
jackgavigan 11y ago
This is one of the reasons why the Bitcoin Blockchain is not necessarily the best choice as a platform for non-Bitcoin purposes. That's why most of the interest from banks is in blockchain technology - i.e. they're looking at creating their own blockchains.
patio11 11y ago
Assuming a complete net split? Then you have chain B in China and B' outside it, each a valid ledger of a different set of transactions. When they're reunited all the transactions only on B' get briefly invalidated as B' nodes reorganize to support the valid chain. (B is more valid than B' because it is presumably longer.). This will likely expose the network to double-spend attacks, where e.g. you take an output spent 2 weeks ago on B' and get a transaction to a B node which moves it internally in your wallet (or to a confederate). This will cause Bitcoin to forget the B' transaction and every subsequent transaction tainted by it. Your goal as the attacker is to have 1+ of these transactions give you economic value prior to your counterparty recognizing the reversal. Good news, though: a net split forking China off Bitcoin would probably result in Bitcoin's central authorities strongly recommending everyone stop processing transactions until they came back.

JohnDoe365 11y ago

Speed trading automated by smart contracts

sjcsjc 11y ago

This is obviously a trivial point, but the word blockchain seems to have lost its definite article. eg (from the linked article): "Last month, Symbiont, which plans to use blockchain to make ..." "Other firms investigating finance-related uses of blockchain ..."

philrapo 11y ago
exactly. Wall Street is enamored with distributed databases, i.e. "shared replicated ledgers". Not the specific bitcoin blockchain or cryptocurrency. Blockchain as a term has become a bit like Kleenex. It's just a generic term to describe a distributed database

onion2k 11y ago

Saying you think something is possible is not an endorsement. When Wall Street professionals actually try it, that is an endorse.

patio11 11y ago

The actual Bitcoin network (7 transactions per second maximum worldwide) is insufficiently fast enough to conduct settlement of one player of a stock market simulation trading with 5 bots in a tutorial level. Reports of Wall Street adopting it for settlement purposes seem slightly optimistic.

rattray 11y ago
> 7 transactions per second maximum worldwide What is the reason for this? Source?
- patio11 11y ago
  The Bitcoin "protocol" (for reasoning on the scare quotes search HN for me and that word) allows blocks to get up to 1 MB in size, currently. A block is mined once every ten minutes. The smallest transaction legal in the protocol is ~224 bytes. You can do the math from here. There's a contentious proposal in the community right now to raise the block size and hence the implicit maximum TPS of the network. Why is that contentious? Oh boy, long story.
  - TeMPOraL 11y ago
    I would be interested in hearing that story. Care to describe it, or point towards some reading material? :).
    - nemild 11y ago
      Start here: http://davidsterry.com/blog/2015/06/arguments-in-the-bitcoin-block-size-debate/ http://davidsterry.com/blog/2015/06/arguments-in-the-bitcoin... Also: https://tradeblock.com/blog/bitcoin-network-capacity-analysis-part-1-macro-block-trends https://tradeblock.com/blog/bitcoin-network-capacity-analysi... https://tradeblock.com/blog/bitcoin-network-capacity-analysis-part-2-macro-transaction-trends https://tradeblock.com/blog/bitcoin-network-capacity-analysi... https://tradeblock.com/blog/bitcoin-network-capacity-analysis-part-3-miner-incentives https://tradeblock.com/blog/bitcoin-network-capacity-analysi... https://tradeblock.com/blog/bitcoin-network-capacity-analysis-part-4-simulating-practical-capacity https://tradeblock.com/blog/bitcoin-network-capacity-analysi... https://tradeblock.com/blog/bitcoin-network-capacity-analysis-part-5-stress-test-analysis https://tradeblock.com/blog/bitcoin-network-capacity-analysi... Hit me up if you need more reading.

amalcon 11y ago

I'm not sure I understand the point of using a blockchain in securities trading? I mean, it's not like it would actually have any of the advantages of Bitcoin[1]. You'll still need to settle accounts periodically (transfer money/stock certificates/etc). Those things aren't going to go away. Once the parties need to trust each other for that, they might as well cut costs by pooling money and buying a centralized order-matching system. That is, make exactly the thing they already have today. [1]-I don't think those advantages are all that great either, but that's beside the point. The point is they don't even apply here!

williamcotton 11y ago
https://en.wikipedia.org/wiki/Depository_Trust_%26_Clearing_Corporation#Controversy_over_naked_short_selling https://en.wikipedia.org/wiki/Depository_Trust_%26_Clearing_... Once you look in to how we're currently able to clear and settle say stock trades, I think you'll agree that there is some room for improvement not only technically but from a trust perspective.

chollida1 11y ago

> Eighty-four percent of respondents said blockchain could reduce the risk a trade won’t settle and the time that process takes, while 74 percent said it could alleviate the chance your counterparty to a trade won’t make good on the deal. Karma to anyone who can explain this to me. How does the blockchain reduce counterparty risk. The counterparty can either produce the required shares or they can't. And to be honest, currently cash equities settle on a T + 3 days basis and options settle on a T + 1 day basis. Most people view that as a feature not a bug. If the markets wanted instantaneous settlement of cash equities they could do it, no one does.

blockchin 11y ago
Any asset can be created on top of the bitcoin with meta-layers such as CounterParty [1] (which is what Symbiont is basing their solution off of) Colored coins [2] or a hybrid approach [3] recently demoed by Deloitte [1] http://counterparty.io/ http://counterparty.io/ [2] http://coloredcoins.org/ http://coloredcoins.org/ [3] http://rubixbydeloitte.com/ http://rubixbydeloitte.com/ (These platforms have received recent backing by NYSE and NASDAQ, respectively) Assets created through Colored coins must use a gateway in a quasi-centralized fashion, however Assets created via counterparty can be traded p2p without a middleman, as they can be natively escrowed by a protocol which enforces atomic swaps and a fair deterministic order matching engine. DTCC's status quo is T+3(days), if there are trades that can be settled on a blockchain, that can be reduced to T+1(hr) or less. IMO Bitcoin is a horribly inefficient trading platform, (aside from the 'advantage' of HFT bots being on equal footing as retail investors) but an ideal settlement/netting/clearing layer. As a minimum there are huge transparency gains to be gleaned. The introduction of Smart contracts potentially opens up the field for a whole new paradigm of smart securities, as well. There are a whole host of established entities researching on blockchain securitization and/or smart contracts at the moment, a subset of them are below: CBW Bank ANZ Westpac Commonwealth Bank of Australia BNY MELLON LHV Bank Barclays UBS Goldman Sachs ABN Amro ING RoboBank SWIFT Santander Standard chartered DBS USAA BBVA KPMG InfoSys Finacle CitiBank DTCC Deutsche Borse Markit EuroCCP CME
- chollida1 11y ago