8 ms·

Maybe Blockchain Really Does Have Magical Powers

176 points by elaineo 10y ago

andrewfromx 10y ago
"the only thing previously stopping the standardization of reconciliation processes was the unwillingness of financial institutions to collaborate. Financial institutions spend $65-80 billion on back office reconciliation every year. The employees working in back offices probably offered lots of excellent reasons why their roles couldn’t simply be standardized away."
lhl 10y ago
I'm all for deflating blockchain hype, but I found the overall tone of the article pretty disagreeable, and more importantly, wholly missing the point. "In other words, the only thing previously stopping the standardization of reconciliation processes was the unwillingness of financial institutions to collaborate." No, actually, the one thing the blockchain provides, which was literally unsolved before pre-Nakamoto, was a working implementation of "trustless" consensus. Turns out fraud prevention is kind of a big deal shuffling around billions or trillions among numerous third parties, but I'm sure that's just because they're "security-conscious egoists."
- Everhusk 10y ago
  I think they are referring to post-bitcoin days, the quote was referenced from a paper released just last month. Resistance to new technology is definitely a thing at banks, I remember when I worked at one I mentioned blockchain one day and everyone looked at me like deer in the headlights.
- deleted 10y ago
  [deleted]
- gbarc888 10y ago
  The banks aren't using trustless consensus. They're using a third-party "uniqueness service" to prevent fraud.
  - mtkd 10y ago
    I doubt this message will propagate further than technical forums - you're just going to have suck up the homogenization, pasteurization, retail branding and consumer promotion of a once great technology
    - lhl 10y ago
      Interesting, my original understanding was that they were using the blockchain for uniqueness for Corda, but it looks like it's optional: https://r3cev.com/blog/2016/4/4/introducing-r3-corda-a-distributed-ledger-designed-for-financial-services https://r3cev.com/blog/2016/4/4/introducing-r3-corda-a-distr... This somewhat makes sense since one of Corda's departures is that consensus and validation are limited in scope to the participants.
- the_mitsuhiko 10y ago
  > No, actually, the one thing the blockchain provides, which was literally unsolved before pre-Nakamoto, was a working implementation of "trustless" consensus. That's the part banks do not care about so I think it's largely irrelevant in the context of this article.
  - lhl 10y ago
    I spoke at length w/ a friend working on mortgage-backed securities for GS a few years ago and dealing with third-party (and even intra-office) trust was specifically why he was looking into blockchains, but I'll admit to not being super familiar w/ R3's blockchain implementation. If anyone has a less diatribey and more technical resource they could link to that'd be great.
    - tigershark 10y ago
      It will never work in that use case. And I was hoping that the recent ethereum fork after the Dao debacle made it clear for everyone..
      - to3m 10y ago
        They will probably not be using the public Ethereum blockchain, so the fork won't be relevant.
  - coderzach 10y ago
    > That's the part banks do not care about so I think it's largely irrelevant in the context of this article. I have no idea where you got that idea, but it's not true. Which is why any deal that happens between institutions (and sometimes intra-institution) has an army of middle men who are responsible for verifying, monitoring, reporting, etc etc.
    - brians 10y ago
      But you still need them in a Blockchain world, and still need to trust them.
- ojosilva 10y ago
  And things like Smart Contracts are relatively new (1994), even though the concepts had been laid out in the 1970s. Smart Contracts are part of what makes blockchain more versatile, enabling transaction ledgers that can support the level of overwhelming (and sometimes unnecessary) complexity BFSIs can produce. Unfortunately, even at this point, Smart Contracts probably still have many security challenges to overcome before banks can adopt it.
- zby 10y ago
  The trustlesness comes with a heavy price of Proof of Work with its wastefulness, complexity and vulnerability to various attacks. I can understand why financial institutions don't want that part.
  - runeks 10y ago
    It shouldn't be necessary either. The proof-of-work is only necessary to avoid a central party wrt. which blockchain is the "right one". Financial institutions are working together with each other, they can easily just agree on which blockchain to follow. But without proof-of-work, the blockchain is just a database with atomic updates. I don't see why they would need a blockchain for that. Ripping Bitcoin in two gives you two fairly uninteresting things: 1) hash-cash and 2) a database full of public keys/signatures. Only combining the two gives you something interesting: negotiable/fungible hash cash (hash cash that can be transferred from person to person via a distributed database).
    - dgreensp 10y ago
      I think by "blockchain" they mean hashed blocks that include the hash of the previous block and can be synced; basically git.
      - TillE 10y ago
        That doesn't gain you much besides a definite order and a way to check integrity. Useful things to be sure, but nothing a traditional database can't do.
    - bendbro 10y ago
      I had this feeling when I was discussing it here. https://news.ycombinator.com/item?id=12044767 https://news.ycombinator.com/item?id=12044767
    - wpietri 10y ago
      > But without proof-of-work, the blockchain is just a database with atomic updates. I don't see why they would need a blockchain for that. I have been asking this question for a long time and not yet seen a satisfactory answer. At this point I'm sure that either I or a bunch of blockchain advocates are missing something important. Glad to know somebody else sees the problem too.
andrewfromx 10y ago
tldr; this whole breakthru in technology called the blockchain isn't a new idea at all. Banks have known about "shared" ledgers since 1800s. But because everyone is talking about Blockchain now in 2016, banks are finally ready to embrace some standards.
- jnbiche 10y ago
  > tldr; this whole breakthru in technology called the blockchain isn't a new idea at all I haven't read the article, and I been tired of blockchain hype for multiple years, but if this is an accurate tldr of the article, it isn't true at all. Blockchains are far more than simple shared ledgers. They're trustless shared ledgers, which is a huge leap forward from simple shared ledgers, and a pretty big deal for financial institutions, for whom dealing with trust issues is a major headache.
  - zby 10y ago
    The point is that the trustlesness is not needed for the applications mentioned in the original report. Also they probably don't want Proof of Work for its wastefulness.
    - wpietri 10y ago
      Or, I'm sure, its relative slowness. LMAX can do millions of transactions per second. [1] Bitcoin is doing, what, 3 TPS? And I don't mean 3 million, just 3. (I get that from ~1600 transactions per block [2] and 1 block per 10 minutes.) Back when I was doing trading systems, my traders would have murdered me if my response time graph looks like the Bitcoin one does. [3] [1] http://martinfowler.com/articles/lmax.html http://martinfowler.com/articles/lmax.html [2] https://blockchain.info/charts/n-transactions-per-block https://blockchain.info/charts/n-transactions-per-block [3] https://blockchain.info/charts/avg-confirmation-time?timespan=all https://blockchain.info/charts/avg-confirmation-time?timespa...
drum 10y ago
Being a general ledger, the Blockchain also can be used as a more professional way of proving you made a prediction at a certain time. Sure, as an individual, I can tweet where I think the P/E of Amazon will be in a year and refer back to it to prove my point, but is that the best way for a financial institution? Having an entry in the blockchain has a more business oriented feel to it.
- spullara 10y ago
  Neither one of these is compelling to me as you have to prove that this was the only prediction you made and you aren't cherry picking the correct ones.
  - Kinnard 10y ago
    Why can't you place multiple bets? Hedging?
    - spullara 10y ago
      Goes back to an old stock prediction scam. You choose 1024 and send 512 the prediction that a stock will go up and 512 the prediction that the same stock will go down. Each day you repeat this process only with the group where you were right. So, 512 -> 256 -> 128 -> 64 -> 32. Eventually you have a small number of people that think you can predict the future and you can ask them for money that you will invest on their behalf.
      - twblalock 10y ago
        This also happens in the sports betting world. People use this method to convince others that they can consistently predict the outcome of games, or the spread, or the other stuff people want to bet on.
        coriny 10y ago
        Nicely demonstrated in Derren Brown's "The System": https://www.youtube.com/watch?v=9R5OWh7luL4 https://www.youtube.com/watch?v=9R5OWh7luL4. Though we've rather ruined the twist ...
kfk 10y ago
Can somebody explain me how we deal with the increasing size of a blockchain? I get moore's law etc., but other than that? I mean, it's trillions of transactions we are talking about. Federated servers? We break the chain in some way?
- jsprogrammer 10y ago
  Most of the chain can be dropped/collapsed. All you need to keep are the final hashes. The white paper discusses this.
- marcosdumay 10y ago
  The best theory I could found is that everybody just starts trusting an old enough snapshot of the chain, and its end becomes the chain's beginning. Then everybody just throws the older transactions away. I can imagine this working in a low volume chain. I do really doubt it would ever work on current Bitcoin chain or anything bigger.
  - JoshTriplett 10y ago
    It seems reasonable even on a massive chain. Some people do need to keep the whole archived part of the chain, and anyone who wants to verify it can do so, while day-to-day transactions can just compress that part of the chain down to a hash. You'd need to keep enough of the chain live for all "live" transactions; that would likely have a time bound (days, perhaps). People who run a "full" client that verifies the complete blockchain then just need to have enough storage for the complete transaction volume over that time period. (And people who only need to worry about their own transactions and don't care about verifying other people's transactions can hold onto even less data.)
    - DougN7 10y ago
      I'm a blockchain noob, but what about people like me that own some bitcoin, but don't touch them for a decade. I imagine my ownership of said coins would be in that part that is truncated/archived/hashed. So how would I then use them?
jsprogrammer 10y ago
>The 130-page report reminds me of those old Coca-Cola ads that promised to cure everything from headaches to exhaustion. The ads worked because nobody really knew what was in a Coke bottle. I would have thought it was the coca. >Similarly, the term “blockchain” has been so misappropriated that no one knows what it means anymore. Thankfully, those who no longer know can just grab the paper at bitcoin.org/bitcoin.pdf and get a refresher.
jcoffland 10y ago
> The technological innovation of a blockchain is that it combines cryptographic signatures with a fault-tolerant distributed database. This is the naive view that has allowed the financial industry to ditch Bitcoin and run with blockchain. The problem that Bitcoin solves and private blockchains do not is called the Byzantine generals problem which did not have a known solution until Bitcoin came along. Private blockchains cannot solve the Byzantine generals problem because they cannot ensure that one of it's limited number of parties is not employing massively more computing power in order to cheat. Bitcoin only works because an unlimited number of players are mining as hard as they can making it improbable that a single entity can exceeded 50% of the total hash power. With private blockchains it will always be reasonable to assume that cheating would be with in reach.
- IshKebab 10y ago
  > making it improbable that a single entity can exceeded 50% of the total hash power Not that improbable: http://www.coindesk.com/ghash-io-never-launch-51-attack/ http://www.coindesk.com/ghash-io-never-launch-51-attack/
  - jcoffland 10y ago
    True, and the problem gets worse with less participants.
  - CyberDildonics 10y ago
    Keep in mind that a 51% attack doesn't guarantee anything, it just increases the likelyhood that you can reorder transactions.
- skybrian 10y ago
  True, but not necessarily that important. In world of Bitcoin this is important due to anonymity and criminal activity. In a regulated industry there are other ways to prevent cheating. Making cheating obvious and undeniable is probably enough to prevent it from happening (due to legal risk).
  - 10y ago
jhallenworld 10y ago
The example clarifies my feeling about blockchain: How would the example provided (avoiding the clearing house) work without the banks accepting something like a mining-backed crypto-currency like bitcoin? With bitcoins, there is no possibility for dispute: bank A gives bank B the money during the transfer. Any other scheme involves a promise (a legal contract), so you will not know for sure that bank A really had the money to give to bank B. The solutions to this are all in use today: (1) Bank A previously gave B money (they have a correspondence account in B). So the transfer is really between accounts at bank B. (2) Bank A gives bank B physical money. (3) Bank A transfers money to B between accounts at some other bank (or the fed). It means A had money in the other bank to begin with. (4) Bank B gives credit to bank A (i.e., Bank B trusts Bank A) and accepts IOUs from them. The banks could cancel out each others IOUs. The IOUs become new money. This used to be done in the old days, but the basis for trust was each bank's gold reserves.
- gbarc888 10y ago
  In scenario (4), they're bank-backed crypto-currencies. Banks are trying to build their own settlement coins: http://www.coindesk.com/utilities-settlement-all-about-banks-not-blockchain/ http://www.coindesk.com/utilities-settlement-all-about-banks...
  - bachback 10y ago
    other approach is issued ColoredCoin by banks - Lykke.com does this. then you get pricing of assets. fiat money are already "settlement coins", the question is about liquidity, risk and openness.
Avalaxy 10y ago
We keep seeing a lot of examples of how Machine Learning can really innovate and reinvent all sorts of processes (i.e. the vegetable sorting we saw on HN yesterday), but when it comes to blockchains, it seems that it's mostly talk about how it could potentially change everything, but so far I haven't seen many very useful examples that couldn't have been done without using a blockchain (the whole blockchain thing often seems to be used just for the coolness factor). Can anyone provide some ideas of how I, as a solo entrepreneur, could improve software by using a blockchain? I get how it might provide tremendous values for bigcorps, but I'm not part of that audience.
- gbarc888 10y ago
  This is a good flowchart that tells you if you need a blockchain: https://pbs.twimg.com/media/Cn1YcTwVMAAvzac.png https://pbs.twimg.com/media/Cn1YcTwVMAAvzac.png
- heliumcraft 10y ago
  http://dapps.ethercasts.com/ http://dapps.ethercasts.com/
  - Avalaxy 10y ago
    Are any of these dapps really in use and making a difference? It seems to me that the listed dapps are mostly technical proof of concepts. For example: a decentralized actuary sounds great, but I find it highly unlikely that the industry is really accepting it. Same goes for flight insurance and option exchanges.
    - heliumcraft 10y ago
      Yes and no. Basically there was and still are major obstacles to widespread adoption. For example, VERY recently stuff like https://metamask.io/ https://metamask.io/ and Mist has been released, which make this sort of apps more accessible to the average user. light clients protocol are still under development, there is lots of important scalability improvements on the roadmap (proof of stake, instantaneous transactions, unlimited txs, etc..). Decentralized storages such as swarm, IPFS, maidsafe etc.. are still under development. Overall, there is a lot of experimentation and throwing stuff at the wall to see what sticks. If you want to develop production ready stuff that your grandma can use today, you might be better off waiting 2-5 years until it's sufficiently mature and all the use cases are obvious. If you like to experiment with new paradigms, new architectures, and explore new business models then it's an exciting field to be in.

176 points by elaineo 10y ago

"the only thing previously stopping the standardization of reconciliation processes was the unwillingness of financial institutions to collaborate. Financial institutions spend $65-80 billion on back office reconciliation every year. The employees working in back offices probably offered lots of excellent reasons why their roles couldn’t simply be standardized away."

lhl 10y ago

I'm all for deflating blockchain hype, but I found the overall tone of the article pretty disagreeable, and more importantly, wholly missing the point. "In other words, the only thing previously stopping the standardization of reconciliation processes was the unwillingness of financial institutions to collaborate." No, actually, the one thing the blockchain provides, which was literally unsolved before pre-Nakamoto, was a working implementation of "trustless" consensus. Turns out fraud prevention is kind of a big deal shuffling around billions or trillions among numerous third parties, but I'm sure that's just because they're "security-conscious egoists."

Everhusk 10y ago
I think they are referring to post-bitcoin days, the quote was referenced from a paper released just last month. Resistance to new technology is definitely a thing at banks, I remember when I worked at one I mentioned blockchain one day and everyone looked at me like deer in the headlights.
deleted 10y ago
[deleted]
gbarc888 10y ago
The banks aren't using trustless consensus. They're using a third-party "uniqueness service" to prevent fraud.
- mtkd 10y ago
  I doubt this message will propagate further than technical forums - you're just going to have suck up the homogenization, pasteurization, retail branding and consumer promotion of a once great technology
  - lhl 10y ago
    Interesting, my original understanding was that they were using the blockchain for uniqueness for Corda, but it looks like it's optional: https://r3cev.com/blog/2016/4/4/introducing-r3-corda-a-distributed-ledger-designed-for-financial-services https://r3cev.com/blog/2016/4/4/introducing-r3-corda-a-distr... This somewhat makes sense since one of Corda's departures is that consensus and validation are limited in scope to the participants.
the_mitsuhiko 10y ago
> No, actually, the one thing the blockchain provides, which was literally unsolved before pre-Nakamoto, was a working implementation of "trustless" consensus. That's the part banks do not care about so I think it's largely irrelevant in the context of this article.
- lhl 10y ago
  I spoke at length w/ a friend working on mortgage-backed securities for GS a few years ago and dealing with third-party (and even intra-office) trust was specifically why he was looking into blockchains, but I'll admit to not being super familiar w/ R3's blockchain implementation. If anyone has a less diatribey and more technical resource they could link to that'd be great.
  - tigershark 10y ago
    It will never work in that use case. And I was hoping that the recent ethereum fork after the Dao debacle made it clear for everyone..
    - to3m 10y ago
      They will probably not be using the public Ethereum blockchain, so the fork won't be relevant.
- coderzach 10y ago
  > That's the part banks do not care about so I think it's largely irrelevant in the context of this article. I have no idea where you got that idea, but it's not true. Which is why any deal that happens between institutions (and sometimes intra-institution) has an army of middle men who are responsible for verifying, monitoring, reporting, etc etc.
  - brians 10y ago
    But you still need them in a Blockchain world, and still need to trust them.
ojosilva 10y ago
And things like Smart Contracts are relatively new (1994), even though the concepts had been laid out in the 1970s. Smart Contracts are part of what makes blockchain more versatile, enabling transaction ledgers that can support the level of overwhelming (and sometimes unnecessary) complexity BFSIs can produce. Unfortunately, even at this point, Smart Contracts probably still have many security challenges to overcome before banks can adopt it.
zby 10y ago
The trustlesness comes with a heavy price of Proof of Work with its wastefulness, complexity and vulnerability to various attacks. I can understand why financial institutions don't want that part.
- runeks 10y ago
  It shouldn't be necessary either. The proof-of-work is only necessary to avoid a central party wrt. which blockchain is the "right one". Financial institutions are working together with each other, they can easily just agree on which blockchain to follow. But without proof-of-work, the blockchain is just a database with atomic updates. I don't see why they would need a blockchain for that. Ripping Bitcoin in two gives you two fairly uninteresting things: 1) hash-cash and 2) a database full of public keys/signatures. Only combining the two gives you something interesting: negotiable/fungible hash cash (hash cash that can be transferred from person to person via a distributed database).
  - dgreensp 10y ago
    I think by "blockchain" they mean hashed blocks that include the hash of the previous block and can be synced; basically git.
    - TillE 10y ago
      That doesn't gain you much besides a definite order and a way to check integrity. Useful things to be sure, but nothing a traditional database can't do.
  - bendbro 10y ago
    I had this feeling when I was discussing it here. https://news.ycombinator.com/item?id=12044767 https://news.ycombinator.com/item?id=12044767
  - wpietri 10y ago
    > But without proof-of-work, the blockchain is just a database with atomic updates. I don't see why they would need a blockchain for that. I have been asking this question for a long time and not yet seen a satisfactory answer. At this point I'm sure that either I or a bunch of blockchain advocates are missing something important. Glad to know somebody else sees the problem too.

andrewfromx 10y ago

tldr; this whole breakthru in technology called the blockchain isn't a new idea at all. Banks have known about "shared" ledgers since 1800s. But because everyone is talking about Blockchain now in 2016, banks are finally ready to embrace some standards.

jnbiche 10y ago
> tldr; this whole breakthru in technology called the blockchain isn't a new idea at all I haven't read the article, and I been tired of blockchain hype for multiple years, but if this is an accurate tldr of the article, it isn't true at all. Blockchains are far more than simple shared ledgers. They're trustless shared ledgers, which is a huge leap forward from simple shared ledgers, and a pretty big deal for financial institutions, for whom dealing with trust issues is a major headache.
- zby 10y ago
  The point is that the trustlesness is not needed for the applications mentioned in the original report. Also they probably don't want Proof of Work for its wastefulness.
  - wpietri 10y ago
    Or, I'm sure, its relative slowness. LMAX can do millions of transactions per second. [1] Bitcoin is doing, what, 3 TPS? And I don't mean 3 million, just 3. (I get that from ~1600 transactions per block [2] and 1 block per 10 minutes.) Back when I was doing trading systems, my traders would have murdered me if my response time graph looks like the Bitcoin one does. [3] [1] http://martinfowler.com/articles/lmax.html http://martinfowler.com/articles/lmax.html [2] https://blockchain.info/charts/n-transactions-per-block https://blockchain.info/charts/n-transactions-per-block [3] https://blockchain.info/charts/avg-confirmation-time?timespan=all https://blockchain.info/charts/avg-confirmation-time?timespa...

drum 10y ago

Being a general ledger, the Blockchain also can be used as a more professional way of proving you made a prediction at a certain time. Sure, as an individual, I can tweet where I think the P/E of Amazon will be in a year and refer back to it to prove my point, but is that the best way for a financial institution? Having an entry in the blockchain has a more business oriented feel to it.

spullara 10y ago
Neither one of these is compelling to me as you have to prove that this was the only prediction you made and you aren't cherry picking the correct ones.
- Kinnard 10y ago
  Why can't you place multiple bets? Hedging?
  - spullara 10y ago
    Goes back to an old stock prediction scam. You choose 1024 and send 512 the prediction that a stock will go up and 512 the prediction that the same stock will go down. Each day you repeat this process only with the group where you were right. So, 512 -> 256 -> 128 -> 64 -> 32. Eventually you have a small number of people that think you can predict the future and you can ask them for money that you will invest on their behalf.
    - twblalock 10y ago
      This also happens in the sports betting world. People use this method to convince others that they can consistently predict the outcome of games, or the spread, or the other stuff people want to bet on.
      - coriny 10y ago
        Nicely demonstrated in Derren Brown's "The System": https://www.youtube.com/watch?v=9R5OWh7luL4 https://www.youtube.com/watch?v=9R5OWh7luL4. Though we've rather ruined the twist ...

kfk 10y ago

Can somebody explain me how we deal with the increasing size of a blockchain? I get moore's law etc., but other than that? I mean, it's trillions of transactions we are talking about. Federated servers? We break the chain in some way?

jsprogrammer 10y ago
Most of the chain can be dropped/collapsed. All you need to keep are the final hashes. The white paper discusses this.
marcosdumay 10y ago
The best theory I could found is that everybody just starts trusting an old enough snapshot of the chain, and its end becomes the chain's beginning. Then everybody just throws the older transactions away. I can imagine this working in a low volume chain. I do really doubt it would ever work on current Bitcoin chain or anything bigger.
- JoshTriplett 10y ago
  It seems reasonable even on a massive chain. Some people do need to keep the whole archived part of the chain, and anyone who wants to verify it can do so, while day-to-day transactions can just compress that part of the chain down to a hash. You'd need to keep enough of the chain live for all "live" transactions; that would likely have a time bound (days, perhaps). People who run a "full" client that verifies the complete blockchain then just need to have enough storage for the complete transaction volume over that time period. (And people who only need to worry about their own transactions and don't care about verifying other people's transactions can hold onto even less data.)
  - DougN7 10y ago
    I'm a blockchain noob, but what about people like me that own some bitcoin, but don't touch them for a decade. I imagine my ownership of said coins would be in that part that is truncated/archived/hashed. So how would I then use them?

jsprogrammer 10y ago

>The 130-page report reminds me of those old Coca-Cola ads that promised to cure everything from headaches to exhaustion. The ads worked because nobody really knew what was in a Coke bottle. I would have thought it was the coca. >Similarly, the term “blockchain” has been so misappropriated that no one knows what it means anymore. Thankfully, those who no longer know can just grab the paper at bitcoin.org/bitcoin.pdf and get a refresher.

jcoffland 10y ago

> The technological innovation of a blockchain is that it combines cryptographic signatures with a fault-tolerant distributed database. This is the naive view that has allowed the financial industry to ditch Bitcoin and run with blockchain. The problem that Bitcoin solves and private blockchains do not is called the Byzantine generals problem which did not have a known solution until Bitcoin came along. Private blockchains cannot solve the Byzantine generals problem because they cannot ensure that one of it's limited number of parties is not employing massively more computing power in order to cheat. Bitcoin only works because an unlimited number of players are mining as hard as they can making it improbable that a single entity can exceeded 50% of the total hash power. With private blockchains it will always be reasonable to assume that cheating would be with in reach.

IshKebab 10y ago
> making it improbable that a single entity can exceeded 50% of the total hash power Not that improbable: http://www.coindesk.com/ghash-io-never-launch-51-attack/ http://www.coindesk.com/ghash-io-never-launch-51-attack/
- jcoffland 10y ago
  True, and the problem gets worse with less participants.
- CyberDildonics 10y ago
  Keep in mind that a 51% attack doesn't guarantee anything, it just increases the likelyhood that you can reorder transactions.
skybrian 10y ago
True, but not necessarily that important. In world of Bitcoin this is important due to anonymity and criminal activity. In a regulated industry there are other ways to prevent cheating. Making cheating obvious and undeniable is probably enough to prevent it from happening (due to legal risk).
- 10y ago

jhallenworld 10y ago

The example clarifies my feeling about blockchain: How would the example provided (avoiding the clearing house) work without the banks accepting something like a mining-backed crypto-currency like bitcoin? With bitcoins, there is no possibility for dispute: bank A gives bank B the money during the transfer. Any other scheme involves a promise (a legal contract), so you will not know for sure that bank A really had the money to give to bank B. The solutions to this are all in use today: (1) Bank A previously gave B money (they have a correspondence account in B). So the transfer is really between accounts at bank B. (2) Bank A gives bank B physical money. (3) Bank A transfers money to B between accounts at some other bank (or the fed). It means A had money in the other bank to begin with. (4) Bank B gives credit to bank A (i.e., Bank B trusts Bank A) and accepts IOUs from them. The banks could cancel out each others IOUs. The IOUs become new money. This used to be done in the old days, but the basis for trust was each bank's gold reserves.

gbarc888 10y ago
In scenario (4), they're bank-backed crypto-currencies. Banks are trying to build their own settlement coins: http://www.coindesk.com/utilities-settlement-all-about-banks-not-blockchain/ http://www.coindesk.com/utilities-settlement-all-about-banks...
- bachback 10y ago
  other approach is issued ColoredCoin by banks - Lykke.com does this. then you get pricing of assets. fiat money are already "settlement coins", the question is about liquidity, risk and openness.

Avalaxy 10y ago

We keep seeing a lot of examples of how Machine Learning can really innovate and reinvent all sorts of processes (i.e. the vegetable sorting we saw on HN yesterday), but when it comes to blockchains, it seems that it's mostly talk about how it could potentially change everything, but so far I haven't seen many very useful examples that couldn't have been done without using a blockchain (the whole blockchain thing often seems to be used just for the coolness factor). Can anyone provide some ideas of how I, as a solo entrepreneur, could improve software by using a blockchain? I get how it might provide tremendous values for bigcorps, but I'm not part of that audience.

gbarc888 10y ago
This is a good flowchart that tells you if you need a blockchain: https://pbs.twimg.com/media/Cn1YcTwVMAAvzac.png https://pbs.twimg.com/media/Cn1YcTwVMAAvzac.png
heliumcraft 10y ago
http://dapps.ethercasts.com/ http://dapps.ethercasts.com/
- Avalaxy 10y ago
  Are any of these dapps really in use and making a difference? It seems to me that the listed dapps are mostly technical proof of concepts. For example: a decentralized actuary sounds great, but I find it highly unlikely that the industry is really accepting it. Same goes for flight insurance and option exchanges.
  - heliumcraft 10y ago
    Yes and no. Basically there was and still are major obstacles to widespread adoption. For example, VERY recently stuff like https://metamask.io/ https://metamask.io/ and Mist has been released, which make this sort of apps more accessible to the average user. light clients protocol are still under development, there is lots of important scalability improvements on the roadmap (proof of stake, instantaneous transactions, unlimited txs, etc..). Decentralized storages such as swarm, IPFS, maidsafe etc.. are still under development. Overall, there is a lot of experimentation and throwing stuff at the wall to see what sticks. If you want to develop production ready stuff that your grandma can use today, you might be better off waiting 2-5 years until it's sufficiently mature and all the use cases are obvious. If you like to experiment with new paradigms, new architectures, and explore new business models then it's an exciting field to be in.