Banks Forgot Who Was Supposed to Own Dell Shares

They wouldn't use the actual Bitcoin blockchain, I think, as they have nothing to gain from the pseudo-anonymity and have better ways to prevent bad actors than proof of work. Instead they'd use what they call a "distributed consensus ledger" which would require one to get permissions (i.e. be known and sign legally binding agreements) to be part of.

If NASDAQ started operating in bitcoins blockchain, the influx capital into it would be so insanely astronomical that the scale of the operation would be impossible to 50%.

When people talk about 50% control of bitcoins blockchain today, they are talking about mining pools, where the ones promising the best dividends get all the registrations and thus get a huge chunk of the mining community. Which just means they always sit at 40 - 49% share in the market, and never 50%, because miners know better.

I would have to doubt the feasibility of even an entity as insanely huge as NASDAQ being able to justify enough computational power to get basically one falsified transaction in bitcoin, before the fact NASDAQ was 51%ing bitcoin caused that huge investment in bitcoin mining I mentioned earlier.

So 51%ing bitcoin is a chicken and egg problem. Any source of capital large enough to monolithically 51% the network is also large enough to bring so much attention to bitcoin that new miners would drive the network size up immediately afterwards. You would probably never be able to maintain continuous 51% control over that kind of runaway interest.

> they could make arbitrary changes to the blockchain

It's not that bad. See https://en.bitcoin.it/wiki/Weaknesses

"An attacker that controls more than 50% of the network's computing power can, for the time that he is in control, exclude and modify the ordering of transactions. This allows him to:

Reverse transactions that he sends while he's in control. This has the potential to double-spend transactions that previously had already been seen in the block chain. Prevent some or all transactions from gaining any confirmations Prevent some or all other miners from mining any valid blocks

The attacker can't:

Reverse other people's transactions Prevent transactions from being sent at all (they'll show as 0/unconfirmed) Change the number of coins generated per block Create coins out of thin air Send coins that never belonged to him"

Regarding your "edit", perhaps voters don't consider your comment that insightful, especially when you spread negative information about bitcoin, such as 50% attacks allowing attackers to "make arbitrary changes to the blockchain".

I downvoted you because - while you raise a generally valid concern - your statement is exaggerated to a degree that makes it grossly misleading. You say:

> which means that they could make arbitrary changes to the blockchain

This makes it sound like the 51% attacker could make arbitrary changes to the ledger, thereby stealing arbitrary shares. That is not the case. For example, such an attacker cannot forge any signatures and thus cannot manipulate transactions. All the attacker can do is censor new transactions or slowly unroll past transactions. In case of 51% of the computing power, unrolling could happen at a speed of (51% - 49%) = 2% of time, i.e. if the attack lasts for 50 days, the attacker could unroll one day worth of transactions. What makes the unrolling problematic, is that it enables the attacker to double-spend. One potential measure for NASDAQ to prevent this is to demand known signatures to be used for transactions (i.e. whenever you transfer shares, you must use a signature you previously registered with NASDAQ). With colored coins, the issuer can enforce such restrictions by refusing to redeem shares that were not properly obtained. So even in case of such an attack, NASDAQ could identify the attacker (or the person collaborating with the attacker in order to attempt a double-spend) and initiate legal measures (i.e. sue the attacker for damages).

I've never understood why people whine about upvotes. If there were no upvotes, would you not even post? Do you only post so you can be validated by mouse clicks of people you don't know?

>As I type this my comment sits at 0 points, as does every comment I make even remotely critical of bitcoin and the blockchain. Why does HN hate people that are critical of bitcoin?

No offense, but you don't appear to understand these subjects very well and you seem to have limited knowledge of them, yet you persist in commenting on them and thereby spreading misinformation.

Possibly you believe you understand the subject better that you actually do? You're not the only person falling into this trap, and I'm sure you intend no malice, but this may be why you get a few downvotes.

I happened to notice this a few days ago, when you made a statement about bitcoin that a few seconds on Google could have shown you was poorly-informed. That's OK, everyone makes mistakes like this sometimes, but when I pointed out the error, you unfortunately tried to divert attention with an extremely weak strawman argument, and then just stopped responding. It's tiresome.

https://news.ycombinator.com/item?id=9837379

There are many, many criticisms that you could make of blockchain technology and bitcoin, not least of which is that nobody even knows for sure if they will work as intended as they scale up. There's no need to leap into the debate with such poorly-informed statements

Bitcoin is crazy polarizing because it fucks with trust. Basically.

Not sure why you were downvoted. But in response to your query, there is always a risk of someone obtaining more than 50% of the netwrok, however with that comes cost, to attack the blockchain by misusing your 50% of the network causes as much damage to yourself as it does to anyone else. Right now if you contolled 50%+ you could double spend your coins, or perhaps you could swap a load of shares into your addresses if NASDAQ were using it to track share ownership, however if you did how long do you think it would take for them to shut down using the blockchain and use e.g. a centralised vrsion they run themselves, you then lose a lot of value in bitcoin, of which you ar emining over 50% of the daily allowance.

Yes it would be possible but it would be expensive and a very short lived way of making money. of course a nation state that wanted to get rid fo BTC would like this but for private individuals or firms there would be no incentive to under take an attack like this.

The entire idea of the Bitcoin blockchain is to provide anonymous consensus. This is a tremendous achievement, but it comes at a great cost, in terms of energy consumption, confirmation time, and risk of reversibility.

Participants in regulated financial markets are all known, which makes the entire design of the Bitcoin blockchain moot. There are much better fits in the design space for financial institutions.

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 love Bitcoin for its counter-economics potential, but "colored coin" solutions for established institutions are a horrendously bad idea.

I played this game. It wasn't expensive, but it sure was annoying sending affidavits back and forth to be signed and countersigned and so forth. For bonus hilarity, we got to do it several times because the number of shares was wrong, then the date the stock was lost was wrong, then the date of the affidavit was wrong.

In my case, I think everybody was at least motivated in the same direction. But if they had decided to put up a fight? Good heavens.

Thus the existence of companies like eShares that do away with this very problem for privately-held companies by issuing stock electronically and providing transparency (audit trails) to stockholders that paper certificates suck at.

Full disclosure: I work there.

Brokers used to keep physical certificates in their own vaults. I had physical stock certificates in the vaults of a broker than went out of business. It took a few weeks and a lot of phone calls and legal threats to get them back. But they did come back.

There is a benefit to the appraisal process in that it is well-defined and somewhat predictable and rational. In a state with less clear process or case law, a dissenting shareholder's path of recourse against a transaction they disagreed with is shareholder litigation, which is costly and may result in a jury trial with very unpredictable results. The DE appraisal process means both sides know what will happen if a shareholder dissents to a transaction, and there is generally confidence that the DE appraisal process is rational. That mitigates some of the risk of shareholder litigation with unpredictable cost and outcome. If you are a shareholder in a company going through a transaction in which there might be other shareholders that dissent, you definitely prefer the predictability of DE.

The issue with incorporating elsewhere is that Delaware law is understood. It is the baseline.

If you go with some rarely incorporated state's Corporate law you don't even know what traps are there, and there are a lot fewer experts. Also it is perfectly possible that no one will have done what you want to do.

This is why some states more or less slavishly copy Delaware corporate law. Of course the weird and complex case law isn't there, but often it is sort of "ported over".

The sheer predictability. As soon as I got to the part where it was stated that banks don't like keeping certificates in their own vault, I knew what was coming next. The bank ordered the certificate, somebody noticed it in the vault, and then sent it straight back. It just add to happen. But then it didn't, or at least no mention was made. Until I got all the way to end, and there it was.

I suppose the benefit of a human system is that we can correct errors that we haven't fully anticipated, by using a general rule such as legal precedent. Remote edge cases in a purely machine system would lead to uncorrectable errors, from time to time. I think an ideal system would combine machine rules to avoid dumb-ass mistakes like mislabeling a share cert on transfer, with human systems to overrule unexpected bad results (e.g., transfers that were obviously not intended by the parties, though processed mechanically).

My startup is, in fact, disrupting the custodial stock ownership space right now and we grew out of a FinTech hackathon last year.

I'm joking of course, but it's only a matter of time until someone tries to Uber (can we make that a verb?) their way over these regulations. And fails miserably at it.

It’s not quite the same. In the US, the shares are legally owned by Cede & Co. on the books of the corporation. DTC then has a database that says the shares really belong to various brokers, for the most part. Finally, the brokers have a database saying which client owns the shares.

This is a legal fiction that you can ignore sometimes, except when you can’t, as in this case.

In many other countries, and I’m not sure about the particulars in Brazil, the central book-entry system is the definitive record of who owns shares. There’s no entity like Cede & Co. that is even nominally the owner. (Sometimes brokers are still listed as nominal owners, eliminating one layer compared to the US.)

Whoever is in the book-entry system is the owner, at least from the point of view of the corporation. This is more similar to the way ownership of Treasury bonds is recorded in the US.

In the countries that I’m familiar with, China has direct recording of ownership for individual brokerage clients, while Denmark has a mixed system where some ownership is recorded directly, but “street name” also occurs. Danish securities owned by foreigners are often held through Euroclear or Clearstream, which does operate more or less like DTC/Cede & Co. in the US.

From what I understood, it's not a matter of levels of abstraction: the system here really is simpler.

According to BM&FBOVESPA's own website (http://www.bmfbovespa.com.br/pt-br/servicos/servicos-de-pos-... - unfortunately in Portuguese only), it has fiduciary ownership of the assets, and individual accounts for each end investor. The brokerage doesn't "owns is an entitlement to stock" or similar; there's a single indirection layer. Your brokerage manages that account for you, but the account is in your name, not in the brokerage's name; you can even login directly to the bmfbovespa site (your login is your national tax ID) and monitor it.

Transistors is way too abstract.

He is talking about something around the HTTP and DNS protocol layers, so getting access to 'http://example.com/' for instance, wheras the article is dicussing the IP routing and MAC address layers. That is, where the actual packets eventually end up, on which NIC and which server.

Wikipedia has the history of the Brazilian system: https://pt.wikipedia.org/wiki/Companhia_Brasileira_de_Liquid...

According to that article, the original system used paper certificates stored with the brokers. To do a trade, the broker sent the paper certificates to a central place (the predecessor of the current one), which recorded the trade and sent the paper certificates to the other broker. The current system is a natural evolution of the old system: instead of paper certificates, we have records directly within the CBLC (now a department of BM&FBOVESPA).

The 1988 constitution was rewritten as part of a regime change (from a USA-supported military dictatorship to its present-day democracy). From what I understand, every time the Brazilian constitution was written or rewritten was due to a regime change. I believe the current USA constitution is also from the last time its regime changed, so there's not much difference in that aspect.

You're thinking small. Imagine a world where there aren't parasitic entities littered throughout a process. Imagine a world where I do not need to trust any third parties in order to exchange any sort of value. Imagine a world where you can exchange your stake in a company directly, with another person, P2P.

Thanks! My eyes tend to glaze, reading about arcane finance.

So how come Group A's bank isn't liable for any loss that A incurred?