Why doesn't the financial industry consider a public blockchain?
How do big financial companies consider resolving adversity like judgments/liens/etc against an settlement based system that's an automaton?
How do big financial companies consider resolving adversity like judgments/liens/etc against an settlement based system that's an automaton?
http://www.history.co.uk/study-topics/history-of-london/lond...
These were the meeting places in which the maritime insurance deals were made at a time of increasing maritime exploration by the British. These also evolved to be the places such materials were bought and sold - and in fact the trading pits were (and in some cases are) based on these gathering locations.
It's interesting to visit the London Metal Exchange which although computerised has the trader pit (complete with circular sofa) in which trades are still conducted between traders.
In an interesting turn of fate the very docks that the traders made possible subsequently collapsed with the introduction of container shipping and ships which were too large to navigate the Thames, and pushed shipping ports to the periphery of the country. In an ironic twist of fate these docks then became the Docklands and home to London's financial district.
Right up until Brexit, when the financial centre was destroyed by petty minded little England, ending four hundred years of global outlook for the sake of believing in lies.
Perhaps if the 'financial centre' were not so ... self-centered ...
I'm moderately hopeful than we won't, but, well, 2016 has been 2016 and I have a horrible feeling 2017 is going to go "Hey, 2016, hold my beer and watch this!"
This is definitely not true. It takes some financial assets 3-5 days to settle after the initial transaction goes through, weaving its way through many database systems (some many decades old) and middlemen who each take a cut, e.g. clearing houses. Any established industry has lots of cruft that builds up.
For this reason Santander estimates that banks can save $15-20bn per year collectively by using blockchain technologies to make their infrastructure more efficient[1][2]
[1] http://www.coindesk.com/santander-blockchain-tech-can-save-b...
Who says you need mining? There's different ways to achieve blockchain consensus, such as proof of stake or proof of existence, you don't need proof of work like Bitcoin uses. Since with a private banking settlement blockchain you know in advance who the players are (individually-invited banks) you can give them a percentage of the network and have each node verify the transactions across the network. You could even give nodes to regulators or consumer advocacy groups to achieve regulatory compliance or consumer oversight if required.
As for cost, you could technically run a PoS node with a raspberry pi, a large USB drive, a wifi connection, powered by a solar panel and an old car battery on the roof of a building. Proof of stake only needs minimal computing power and a persistent internet connection.
Seriously, a lot of the scorn heaped on blockchain technology is unwarranted. Yes, there's loads of hype and bullshit (we're going to get rid of nation states and fiat currency!!!1!), but no more than the internet in 1994 or during the dotcom boom. Yes, lots of crap ideas, but some gems too. It's too early to see what real impact it will have. Criticising current blockchain technology is like criticising early broadband or smartphones.
They most definitely do not, 2008 took care of that.
> It doesn't make sense for them to be held under public scrutiny
That's a matter of debate. The banks are held to, more or less, realtime scrutiny by the regulators on behalf of the public. Actually making transactions truly public would have tricky client confidentiality issues. That's why the focus has been on settlement and clearing as that's potentially more tractable.
> Therefore, blockchain is a solution without a problem for financial institutions
Possibly. The idea of a single version of the truth is very appealing to banks as a huge amount of time and effort is expended on reconciling trades, settlements etc. Whether a global transaction ordering has a use is debatable. Things like proof of work even less so.
Bear in mind, as others have said, you can take some of the features that have been applied to blockchains and use them separately. It's not a one size fits all. However, if you take away enough stuff then you often find that other technologies could be more appropriate.
> Their needs are already well met and there's little incentive to change
Not at all. No-one's really happy with the status quo. The regulators want to be sure that the banks are well risk managed. Even further, they want semi-continuous proof that it's so. The banks need to satisfy the regulators and still make money. The banks are a long way from that today.
> why uproot everything for a buzzword
They may well not but you underestimate the ability of senior folk in big organisations to get distracted by the shiny, shiny. Banks are no exception, they are just as susceptible to fads as anyone.
On the positive side, they are surprisingly good at accepting experimental technology. They've been early adopters of relational DBs, XML, Java, Smalltalk, Haskell, OCaml, object DBs, FPGAs etc etc. Of course, they're also one of the biggest users of COBOL so it's swings and roundabouts.
- Unnecessary uncertainty: public blockchains can fork (i.e. ethereum) or change (bitcoin block size debate, segwit, etc) unrelated to your needs.
- Dealing with forks, and various other behaviors adds lots of unnecessary complexity.
- Less secure since publicly open for anyone to attack.
- Constrained feature development that requires consideration of all actors.
- Slower and more expensive: public blockchains require world-leading mining power and lots of time (60+ mins, 6 confirmations) to remain secure from government-scale attacks.
- If proof of stake is used (untested), instead of proof of work, to mitigate the cost and time issues, then you introduce many unrelated actors influencing core aspects of your business.
I can't see why a private consortium of banks would replace their currently custom, private, controlled databases and code, with public ones.
> How do big financial companies consider resolving adversity like judgments/liens/etc against an settlement based system that's an automaton?
The system isn't an automation, there are still the same decisions being made, they are just being recorded in a smarter way that cuts out a lot of unnecessary verification/trust work. They still have relationships with each other, each other's identities, and legal agreements enforcing all their actions. If funds need to be returned, a new transaction is created to return them. Liens can be coded into assets for convenience, etc. Any automation they choose to add in smart-contract type things is optional, and can be done gradually.
Without all the public features, the core blockchain becomes very simple, basically a chronological db of signed transactions - but it still gets to keeep the sexy name.