Daimler Uses Blockchain to Issue Bonds

> If I get a piece of paper that says I own some asset there is offices full of people who are dedicated to ensuring that piece of paper properly represents some piece of land, car, security etc. Why would you not want to automate such a system?

I've been saying this for couple of years now: the most likely "disruption" from blockchain technology is going to be in notarial functions. The concept of coloured coins[0] allows to use a globally available, publicly verifiable, and for all intents and purposes a forgery-immune register to verify contracts.

Cutting through all the [templated] legalese, we can say: "Contract A, between parties K and L, concerning transaction T: T shall be considered done and legally binding once Coloured Coin X has been paid from address [foo] to address [bar], and has been verified by no less than 20 subsequent blocks."

There will be lawyers involved, of course. Someone has to actually enforce the contracts and deal with off-blockchain disputes. But dealing with the actual physical transactions and transfers of ownership could be streamlined.

0: https://en.wikipedia.org/wiki/Colored_coins

  > The whole point is to cryptographically be able to prove
  > ownership of something to the network.

Ownership is not the same thing as possession. Using a blockchain for bonds is analogous to bearer bonds, or even just plain cash. There's a reason why both bearer bonds and large denomination currency bills are no longer issued.

  > Given that bitcoins, litecoins and ether aren't magically
  > disappearing out of people's wallets

They do magically disappear. Both traditional fraudsters (e.g. Mt. Gox.) and criminal hackers take bitcoins all the time. The blockchain doesn't care, of course.

Expect in the next couple of years movies to start featuring Bitcoin heists. I'm sure the scripts are already being passed around at the studios.

I don't quite understand your last paragraph, but for the rest:

> The whole point is to cryptographically be able to prove ownership of something to the network.

I don't think that's the problem that blockchains solve. That problem can be solved without blockchain just by using public/private key cryptography and digital signatures, along with for instance a public ledger. But a public ledger doesn't need to be distributed and subject to consensus protocols, mining dynamics, etc. It can simply be hosted on a website.

I am really confused by this logic.

So it's better to ask companies to invest in implementing "blockchain" within their network instead say upgrading their databases or their infrastructure to the current technology level? Then they could simple have API/Middleware calls between systems which can do this even more efficiently.

Interesting point. A big problem with blockchain-style ledgers is that the definition of "ownership" is nebulous and far from instant, only increasing in certainty over time. We each might have a different time frame before we're sure a transaction has taken place.

If there's a particular group responsible for paying out the security, then it makes more sense to me for that group to just host a ledger on their site and officially endorse all transactions (which can use the same crypto that blockchains use). This would be instant and transparent.

I don't understand how security trading works, but if there is truly no trusted authority responsible for either paying out the security or enforcing that it gets paid, then I guess I see the possibility for using a blockchain (but probably you also would want cryptocurrency...).

If I woke up and found that my securities had been instantly and irreversibly transferred to China overnight, I would not be happy, at all.

Cloud skepticism was never on the level of blockchain skepticism.

Cloud solves a real problem of scalable and efficient resource allocation and provisioning for distributed applications, as you note, in both public and private cloud settings, a problem and concept well-understood in the research community that long predates "cloud" as an enterprisey business buzzword.

And as applied, e.g. to centralized financial institution ledgers, cloud skepticism has born out. Workhorse mainframes are still doing bread-and-butter work in mission-critical settings just fine. Where they are "modernized" it is not always to anything resembling "cloud" configuration.

Blockchain, on the other hand, "solves" the invented problems of cypherpunk, crypto-libertarian fantasy. There is essentially no application where it has met with unqualified success or demonstrated advantage outside of the criminal underworld. Bitcoin did very much help make monetized ransomware a thing, so there's that.

A lot of these things are seemingly no-ops because the tech has to be proven and withstood tests of legality. However some of these trust-less distributed systems are approaching a point where turning them into real systems in use is a matter of contractual agreement from a customer or peers involved and or the government. The disruption will be quite sudden once this happens.. assuming the tech moves faster than the bureaucracy, as is usually the case.

Calling it a no-op is pretty naive, any significant step towards allowing bearer tokens of more tradition securities has enormous value, and each step towards it has value as well.

It's a big deal imo, but a major blow for Bitcoin, because it's nowhere to be seen.

Have you ever purchased a bond? Ever wanted to sell one on the secondary market? Ever heard of the Securities Transfer Agents Medallion Program? You will if you try to trade bonds in the conventional way, which is a huge pain in the ass.

There is a lot of room for improvement by implementing the blockchain.

1) Bond issuers have backends that they have to manage. Billions in legacy software and assets. By being able to unify the ledgers then that will reduce the need for them. So anyone involved in the backend will be affected, programmers, administrators, managers, clerks. They may not be gone but their numbers will be reduced.

2) Cost of financial instruments will be greatly reduced so companies will be more likely to do the work in house. The number of financial firms will be less therefore there will be less jobs in what is now the financial industry. New jobs expertise will be needed but current expertise are at risk. Middle men will be reduced. There will be a Google/Amazon type of player that will eat the industry world wide.

3)The cost of issuing debt will collapse so anyone involved in loans will be affected.

There are many other ways that Blockchain will impact the industry but these are the ones I can think of right now.

How long? Who knows. But it will be here faster than expected. For timeline, here's one to ponder. How has the cloud affected network admins in the last 10 years? The impact has been large yet it's only been a few years since it first started.

The "jobs" this technology replaces were computerized in the 1960s and 1970s. The application of the blockchain only speeds up settlement because there is a single ledger between multiple parties.

You can't be trusted to self-certify what you own. Middlemen who are trusted to keep the records of who owns what charge fees for their services.

Ethereum's main selling point is it lets you issue illegal unregistered securities. Why would a real company want to associate with that?

Also the lead developer is some kid who believes very much in moving fast and breaking things. This philosophy may work for a social network site but not for other people's money.

How many terrible bugs have been discovered in Ethereums short history? Too many. Additionally the size of its blockchain has already passed Bitcoin. It's file size is growing so fast and will pose a serious technical problem.

It's more likely they would use their own private blockchain. (Something ethereumish, like JP Morgan's Quorum, or Hyperledger Fabric).