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Comment by mikeyouse | Hacker News Reader

I can't believe that there's any possibility of banks doing anything of value on the Bitcoin blockchain when they could easily coopt the blockchain tech and set up trusted miners. The public immutable ledger with full transaction history is obviously interesting to Wall St. but what are the chances any of these banks will trust anything of value to the current ideological devs of a ~$3B commodity controlled entirely by unknown Chinese miners? The underlying notional of anything interesting on Wall St. is measured in trillions.. Can you imagine them suffering through the squabbling with the block size debate or hoping that miners don't collude to roll back the last month's transactions?

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You seem pretty intent on posting strawman arguments and fud in every bitcoin related thread.

You do realize that it is basically impossible for a miner to roll back last month's transactions and that no such thing has happened at all, right?

Colluding miners could pretty much do whatever they wanted..

> and that no such thing has happened at all, right?

Except that time when 184 billion Bitcoin were created out of thin air and dispersed to two wallets.. Then the devs/miners agreed that the previous 5 hours' worth of transactions shouldn't count and hard-forked at an arbitrary point in the past.

https://en.bitcoin.it/wiki/Value_overflow_incident

Those are two incredibly different things. What you are talking about and linked to was a bug. That has nothing to do with miner colluding with each other to modify the ledger to their benefit.

A couple of weeks ago I talked to the CEO of startup in NYC building a proprietary blockchain-like protocol/product for banks.

According to him if a bank interacts with the bitcoin blockchain in any way (mining and/or posting transactions), they are violating a host of AML and KYC regulations because they do not know the identity of other players on the network.

Apparently the claim could be made that the bank is collaborating with all other miners/transaction creators, and the bank must know certain information about these people. Also if someone posted a transaction from Iran, and the bank helped mine that transaction, that's a big problem.

I don't know if his logic is correct, but it seems many of those in the bitcoin community are underestimating the regulation hurdle that wall street will need to figure out.

It seems to me that some are overstating their case and believing their bullshit in order to sell the banks a rotten tomato when a perfectly healthy potato exists.

Sort of how years ago some people/companies would claim that using Linux in enterprise would cause all sorts of issues for said companies in order to sell their own propritary and nonopen solution.....

Yes, but if the banks set up their own Bitcoin-like blockchain but with an added certificate authority, then they'd be putting their money where their mouth is, and then you'd be the one looking like you're overstating your case.

As a media skeptic, the 1st suspect is the one who is ascribing motivations to other parties/groups with no evidence. This goes double when something "technical" overlooks technical alternatives that would demolish one's own argument.

Nothing stopping them from doing so, tho the use of a blockchain in such a "centralized" context is silly and an overkill when they can use a normal database with better/faster results especially if they already know+trust each other.

so, tho the use of a blockchain in such a "centralized" context is silly

As you yourself noted, if a dozen banks got together to do this, it wouldn't be any more centralized than what we have now!

The obvious question here is: Why do banks need Bitcoin?

Why does Bitcoin need banks?

Who cares if current banks ever figure out Bitcoin? For the vast majority of people and use cases, Bitcoin makes banks redundant.

If it's "bitcoin-like" then it will be similarly used as bitcoin. The efficiency blockchains offer is regulatory arbitrage. If the proposed system is not-actually-bitcoin-like, and doesn't circumvent regulations, it's hard to see what efficiency is being offered, over a centralized system.

I have no idea if bitcoin is useful for banks. What does seem fairly certain is that these "Bitcoin without the bad guys" pitches are pretty flimsy.

What if instead of coopting the tech, they add their resources to the existing blockchain, making it more robust?

The entire point of the above comment is that the bitcoin community and software is not trustworthy for their purposes.

Not today, but maybe tomorrow if banks start mining themselves and dedicate developers to the project.

Yes, but they could start their own closed blockchain instead of mining for Bitcoin.

Or they could just maintain their own ledgers for 1 billionth the computational cost.

Bitcoin by itself doesn't actually need much energy - it could easy run in a single server. The reason it uses so much now is because so many miners have joined, so the software increased the computational difficulty to keep generating 1 block every 10m.

If you run the bitcoin daemon in "regression test" mode, which creates a private, disconnected blockchain, it can actually generate ~200 blocks per minute using just a single CPU.

If a block chain is closed and the membership known, you could use some metric of "organizationally distinct signatories" to determine the length (/cost) of a chain rather than proof of work.

Don't they do that already? What is a 'closed blockchain' if not a sql server? The only value a blockchain has is as a public resource.

A closed blockchain is still distributed (just not open to everyone), and still has different nodes checking up on each other, while an SQL server is a single point of potential fraud.

Do banks process actual transactions through a SQL Server?

Sure, where do you think Oracle gets all their revenue? :) I mean, interbank transactions go through a clearing house like FedACH, but even that is just a remote RDBMS.

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