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Bitcoin The Almighty Buck Technology

Nine of World's Biggest Banks Create Blockchain Partnership 93

An anonymous reader writes: Nine major banks, including Barclays, Goldman Sachs, Credit Suisse, and JP Morgan have teamed up to bring Bitcoin's blockchain technology to financial markets. "Over the past year, interest in blockchain technology has grown rapidly. It has already attracted significant investment from many major banks, which reckon it could save them money by making their operations faster, more efficient and more transparent." Leaving aside the question of whether banks actually want to become more transparent, they're funding a firm dedicated to running tests on how data can be shared and collected through the blockchain. "The blockchain works as a huge, decentralized ledger of every bitcoin transaction ever made that is verified and shared by a global network of computers and therefore is virtually tamper-proof. ... The data that can be secured using the technology is not restricted to bitcoin transactions. Two parties could use it to exchange any other information, within minutes and with no need for a third party to verify it."
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Nine of World's Biggest Banks Create Blockchain Partnership

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  • Blockchain patents incoming.

    • Blockchain patents incoming.

      And certification, as you can't just let anybody mine bitcoins, I mean this is anarchy.

    • by Anonymous Coward
      Already here. The banks are behind the 8-ball as the Overstock.com CEO has been doing R&D and filing patents now for some time.
  • I told you so (Score:5, Insightful)

    by Applehu Akbar ( 2968043 ) on Wednesday September 16, 2015 @10:36AM (#50532219)

    "The data that can be secured using the technology is not restricted to bitcoin transactions. Two parties could use it to exchange any other information, within minutes and with no need for a third party to verify it."

    The best feature of Bitcoin has been its use as a proving ground for blockchain technology. Now that it has survived several years of the intensive hacking attempts that a virtual currency would obviously be first to undergo, banks are starting to deem it ready to track other kinds of transactions.

    • >track other kinds of transactions
      Track, but also hide...
    • Re:I told you so (Score:5, Interesting)

      by pla ( 258480 ) on Wednesday September 16, 2015 @11:42AM (#50532943) Journal
      Now that it has survived several years of the intensive hacking attempts that a virtual currency would obviously be first to undergo, banks are starting to deem it ready to track other kinds of transactions.

      True, but extending the resilience of the BTC blockchain to privately controlled uses, ignores one key point...

      The current BTC mining network pushes 407.7 PH/s. The entire TOP500 supercomputer list can manage 363.3 PFLOPs/s. One hash takes 12697 FLOPs (officially - The exact number depends on how you calculate it, since hashing doesn't actually involve any floating point operations). That means we have approximately 14000x the computing power on this planet dedicated to Bitcoin mining as we do "real" supercomputing resources available.

      The Bitcoin network has such high resilience to attack because you would need more computing horsepower than it has to compromise it (and even that doesn't mean you can arbitrarily rewrite the past, just that you can force a fork in the blockchain that you control). Assuming some half-assed clone by a handful of companies would have anywhere near the same level of security ignores almost everything that makes Bitcoin so secure.
      • by Anonymous Coward

        True, but extending the resilience of the BTC blockchain to privately controlled uses, ignores one key point...
        The current BTC mining network pushes 407.7 PH/s.

        Bitcoin mining has little to do with blockchain computations. The former needs vastly more computational resources than the latter. The security of the blockchain has nothing to do with "computing horsepower", and everything with its distributed nature.

        • Re: (Score:2, Insightful)

          by Anonymous Coward

          I'm sorry but you are 100% wrong. The security has EVERYTHING to do with the computing horsepower, the distributed nature is what makes it robust.

          You need a 51% attack to "double-spend". When the cost of achieving a 51% is more than a king's ransom: that is security in a very real and meaningful way. If someone COULD tamper with the blockchain, they WOULD tamper with the blockchain because their is a HUGE monetary incentive to do so.

          • by Anonymous Coward

            Nope, the blockchain is tamper proof because:
            - the data is distributed to a large number of nodes
            - the validity of that data is determined by consensus between those nodes
            - the data is cryptographically signed

            To spoof a blockchain record, you'd need to either:
            - control a majority of the nodes
            - break the cryptographic sign -> even with all the computing horsepower of the world at your disposal, this would take literally forever

            What I was arguing before, is that to USE blockchain transactions, you don't ne

            • Nope, the blockchain is tamper proof because:
              - the data is distributed to a large number of nodes
              - the validity of that data is determined by consensus between those nodes
              - the data is cryptographically signed

              To spoof a blockchain record, you'd need to either:
              - control a majority of the nodes
              - break the cryptographic sign -> even with all the computing horsepower of the world at your disposal, this would take literally forever

              What I was arguing before, is that to USE blockchain transactions, you don't need that much computing power. It's tied to mining in Bitcoin, but doesn't need to be.

              Don't be so confident about the signing part. It's one IACR paper away from doom.

          • by GuB-42 ( 2483988 )

            Bank will probably won't use a proof-of-work mining scheme like bitcoin.
            More likely they will keep a centralized model for currency generation and use the blockchain model only for transactions.

      • ignores almost everything that makes Bitcoin so secure.

        Bitcoin uses secp256k1. It is barely secure today. It will likely fall in due course. That's a really stupid curve to use. That's why no one uses it for anything - except bitcoin.

        Try googling "koblitz curves are bad".

    • by Anonymous Coward

      Actually, given that these banks business involves finding ever greater and newer ways of committing massive fraud, this probably means they've finally found a successful way of exploiting blockchain tech, and want to roll it out to the rest of the world.

  • by jaeztheangel ( 2644535 ) on Wednesday September 16, 2015 @10:38AM (#50532255)
    Razormind, Ethereum, Eris Industries et al have been working on decentralized systems for nearly two years now. Eris released their DApp server for exactly this usecase and are working in the States to spread word of the tech. Ethereum recently pulled into release mode, and their decentralized system for smart contracts is slowly gaining momentum. Razormind has been working on a Decentralized Operating System which is driven by blockchains. The banks have only recently moved into the space properly - there was a $30m investment in Chain by Citi et al a few days ago - but folks like UBS and Barclays have been setting up blockchain labs and accelerators in London to investigate the possibilities.
  • by JcMorin ( 930466 ) on Wednesday September 16, 2015 @10:41AM (#50532281)
    Let me guess: they want to copy Bitcoin but not everyone can participate (only approved banks). They want to copy bitcoin but not everyone can mine (only major banks). They want to copy bitcoin but not everyone can see all transactions (filter to your own transactions only?). Yeap, it will end up with a close system in a centralized database just like they have right now.

    Bitcoin is about losing control to anyone and open access.
    • - If not everyone can participate they will remove the consensus code and add some sort of centralized authentication.
    • - If not everyone can mine it they will again have some sort of centralized authentication.
    • - If they remove the mining entirely, the currency creation will be either pre-mined with some banks at start or distributed based on a some specific rule that will favor the big starting banks. Having no mining will also remove all incentive to validate the transaction, make the whole thing weak and prone to double spend attack.
    • - If they don't want everyone to see all the transactions, it will be close network with restricted access. A single bank could leaked out the entire blockchain, I'm not sure they really want to go in that direction!
    • by known_coward_69 ( 4151743 ) on Wednesday September 16, 2015 @10:44AM (#50532301)
      this isn't about mining anything. it's about doing financial transactions without Visa, Mastercard or pesky central banks having to be paid to verify transactions
      • The concept of mining was to bootstrap the currency. How do you start it? who have how many? The big bank all start with 1 billion? They transfert a real billion to who to get the virtual currency? If they transfer the real money in a "pot", that would be a system the ACH in USA. Someone do control the pot. This has nothing to do with a decentralised blockchain.

        The concept of mining CANNOT be removed that easy.
        • Bitcoin is a digital "currency". It happens to use a block chain to publish a record of transactions in that currency. Currency and transaction records are two different things. A digital currency doesn't have to use a block chain, and a block chain doesn't have to be tied to a currency.

          The banks might use a block chain to publish a record of US dollar transactions, or stock transactions. Maybe they'll have a chain for Tesla stock, so when your monthly retirement savings occurs it'll record "JcMorin bo

      • If you don't mine, you don't get new blocks. If you don't get new blocks... well, that's how the blockchain works.
        • Re: (Score:2, Interesting)

          by Viol8 ( 599362 )

          "If you don't mine, you don't get new blocks."

          Don't be silly. Mining was a side effect of the algorithmic design of bitcoin. For a completely new system the blocks could all be created in advance using random numbers and allocated on a need basis. If someone manages to guess an unreleased block and uses it then the police are called.

          • by Troed ( 102527 )

            Huh?

            How can news blocks be created in advance without knowing the input and outputs?

            There's no blockchain without "mining". There's no mining without incentives. Whether the inventive is called a coin or not is irrelevant as to its value.
             

    • Re: (Score:3, Insightful)

      by Anonymous Coward

      They won't be using the blockchain as currency, only as a ledger. The coins won't represent actual money, but the capacity to write entries to the ledger. The incentive to validate transactions is they want transactions to be validated, not because the coins have direct monetary value.

    • Bitcoin's problem is that they artificially limited the maximum number of bitcoins to 21 million. That breaks one of the fundamental requirements for a true currency. The entire reason countries have moved off the gold standard is because for a currency to function, it has to grow at roughly the same rate as your economy. Gold didn't, and every time economic growth outstripped the rate new gold was mined, the currency deflated (gold became worth more). The economy subsequently went into recession as it
      • by lgw ( 121541 )

        Bitcoin's problem is that they artificially limited the maximum number of bitcoins to 21 million. That breaks one of the fundamental requirements for a true currency. The entire reason countries have moved off the gold standard is because for a currency to function, it has to grow at roughly the same rate as your economy. Gold didn't, and every time economic growth outstripped the rate new gold was mined, the currency deflated (gold became worth more).

        No, that's way off base. The size of the US money supply isn't increased by printing more slips of paper with presidents on them. The number of tangible (well, whatever you want to call a bitcoin) units of currency barely matters to the money supply.

        The size of the money supply is controlled by fractional reserve lending, and indirectly by insurance floats and credit derivative swaps (there are nearly $1 quadrillion in CDSs now). All of that would work with BTC, or gold, or USD with equal facility.

        Rememb

      • by spyfrog ( 552673 )

        Best description of the problems with Bitcoins and the limit of 21 millions that it has ever (and that a great deal of the coins is actually missing).
        The fact that you can divide a Bitcoin in smaller chunk doesn't really help when a great deal of the coins is already mined and owned by someone.
        My guess is that you will be down moderated since you say things that the Bitcoin fan-boys don't want to hear...

        • Ok I'm a bitcoin fan-boy, I will say that bitcoin is an experimental currency. All other have infinite supply, and this one doesn't. Let the game play and see the result in the long terme. By the way this is many clone of Bitcoin including some without any limit.
      • by twokay ( 979515 )
        Actually i believe the 21 million number has some background in the cryptography and how it is computed. The specifics are way above my understanding, but i certainly remember reading an explanation that cited this as one of the reasons for the upper limit.
  • blockchain bail-out
  • Are they ignoring the proof-of-work or what? That's not efficient at all. By design.

    • There are two different concepts. Bitcoin is a digital "currency". It happens to use a block chain to publish a record of transactions in that currency. Currency and transaction records are two different things. A digital currency doesn't have to use a block chain, and a block chain doesn't have to be tied to a currency.

      The "proof of work" is used for the CURRENCY, to avoid having a limitless supply of Bitcoins. You want to limit people's ability to produce new bitcoins. You don't need (or want) to limi

  • I wonder if this is coming about because of Mr. Robot ? Prevent someone from destroying all their data/backups :P
  • Fixed headline (Score:1, Flamebait)

    by monkaru ( 927718 )
    "Nine of the worlds biggest banks have figured out how to game bitcoin"
  • by Anonymous Coward

    This is a sign of Bitcoin maturity.

    It's also a sign of major players seizing control.

    There's going to be a new BankBitcoin. It'll be better and more monetizable and under control, with hookers and blackjack!

  • If the block chain is so unerringly perfect, recording the validity of every transaction throughout time, how has it been so easy for people to steal huge numbers of bitcoins and disappear with them?

    • by Anonymous Coward

      Because people connect systems like poor security to the internet. The blockchain doesn't can't discriminate between a transaction that involved a transfer of dollars first or not. All it cares about is if the chain of ownership is valid. You can only steal a bitcoin if the person you're stealing it from has a bitcoin to be stolen.

      Nobody has ever hacked the blockchain or bitcoin itself. Only systems that utilize bitcoin.

      And nobody has ever "disappeared" with a bitcoin. It's still traceable trough the blockc

  • I think the banks should pre-pay the eventual millions/billions of dollars they will eventually be fined for whatever nefarious purpose this will be used for. They can write it off their books early, we can avoid lengthy trials and endless bloviating about how "something must be done to rein in the financial system", and we can all just admit that it's going to happen anyway so why not get ahead of the curve?

As in certain cults it is possible to kill a process if you know its true name. -- Ken Thompson and Dennis M. Ritchie

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