I don't understand why banks and companies are hyping "blockchain"

[c789]

I've read literally dozens of articles on Coindesk, Bitcoinmagazine, and other Bitcoin-related sites and they are inundated with articles about how X bank wants to start using blockchain technology.

But in all of those articles I couldn't find a decent explanation as to why a bank would want to use their own blockchain instead of using Bitcoin. For example, we know that a blockchain is made more secure if more independent nodes are in operation. So does the bank plan on setting up lots of their own nodes for their own blockchain, and/or making any person who wants to use their services do so through the person's own node? Neither of those sound like a good plan, but in all that I've read, nobody has explained why/how a bank would secure and use their own blockchain.

I'd appreciate anyone's answer, or a link to an article that explains this.

[1713959713]

1713959713

[visual111]

The word "Bitcoin" has become tainted within culture. Bitcoin is commonly associated with things like Silk Road, MT Gox, ect..all sorts of scandals. So, when marketing bitcoin, people are now talking about "blockchains" and not "bitcoins"

[c789]

The word "Bitcoin" has become tainted within culture. Bitcoin is commonly associated with things like Silk Road, MT Gox, ect..all sorts of scandals. So, when marketing bitcoin, people are now talking about "blockchains" and not "bitcoins"

Yeah, I can understand that. But many of these articles say that X bank wants to develop their own blockchain. That's what I don't get...how it would be secured. Plus, it's a central authority which defeats one of the primary purposes of Bitcoin. None of the articles has addressed that aspect either.

[Soros Shorts]

If I were to take a guess, if some banks could transfer money to one another using blockchain technology it would be much cheaper than using the SWIFT network. It costs a lot just to maintain a BIC plus additional usage costs for messages sent and received.

Granted, the banks are behind SWIFT, but it is still a competitive industry and they could save a lot of money if some messages could be sent outside SWIFT.

I used to be the SWIFT administrator for a small financial startup so all the bills went to me.

[bri912678]

The banks don't trust each other when they are transferring money among themselves. They have slow, cumbersome systems that are decades out of date to do the job, and they all agreed to trust their common systems. If they all agreed to use the same "bank coin" they could transfer money between themselves faster without trusting each other. They don't want to use Bitcoin for transfers because they can't control it, but they can have complete control over their own "bank coin".

[franky1]

The word "Bitcoin" has become tainted within culture. Bitcoin is commonly associated with things like Silk Road, MT Gox, ect..all sorts of scandals. So, when marketing bitcoin, people are now talking about "blockchains" and not "bitcoins"

kind of half right..
but its more about people who used to talk about bitcoin the technology/protocol and bitcoin the currency without defining the difference.
so the word blockchain is for the technology/protocol. and bitcoin is the currency..

now onto the OP's point.
banks cant own bitcoin.. as ~15mill coins out of 21mill are already in peoples hands so they cant really control it..

however starting their own altcoin currency using the blockchain technology allows them to have their own controls on a limited supply asset, which they can premine/sell at their pleasure.

now the way i see it.. although you may think of a bank as a single entity.. the banking industry do not want a single employee to defraud the system, so although as a industry they are not good.. within the industry they dont want the individual employee's getting rich from it.. so its in their interest to have 500+ nodes scattered around in 500 undisclosed locations all equally mining the same chain, purely for their own internal security..

just imagine how much they would save on not needing to have internal fraud squad, security guards, and double audits..

that alone would save them many millions of cost in labour and time.

[vm_mpn]

The word "Bitcoin" has become tainted within culture. Bitcoin is commonly associated with things like Silk Road, MT Gox, ect..all sorts of scandals. So, when marketing bitcoin, people are now talking about "blockchains" and not "bitcoins"

Yeah, I can understand that. But many of these articles say that X bank wants to develop their own blockchain. That's what I don't get...how it would be secured. Plus, it's a central authority which defeats one of the primary purposes of Bitcoin. None of the articles has addressed that aspect either.

It will be secured inside their own private networks by their own servers, as private intranets are secured being somewhat isolated from the internet... R3CEV is developing some sort of collaborative blockchain type project joined by large 25 banks (I'm guessing inter-bank transactions and settlements blockchain) http://www.coindesk.com/distributed-ledger-firm-r3cev-gains-three-more-banking-partners/. All this will probably end up badly but this is very interesting to watch... Who said financial institutions will have to embrace bitcoin blockchain without going through their own painful mistakes and failures first.

[c789]

As for a bank's own altcoin:
I'd love to think that if a bank were to issue their own altcoin and try to get people to use X bank's altcoin, people would say, "Why would I use your coin when it's issued by a central authority when I can use Bitcoin without a central issuing authority?" But since most people have never heard of Bitcoin and since the bank would be able to easily outmarket BTC (which has no marketing), then I fear that the masses would use that instead of Bitcoin. I really hope that doesn't happen.

As for internal and bank-to-bank transfers:
I can see how the banks would benefit from this and it seems feasible. They would still have to figure out how to distribute the blockchain in such a way as to ensure its security, and that could be tricky if lots of banks are involved (e.g. how many nodes can each bank have, how to allocate nodes for new banks, etc.).

Thanks for the comments. You've raised some points that I was not aware of.

[Harry Hood]

The word "Bitcoin" has become tainted within culture. Bitcoin is commonly associated with things like Silk Road, MT Gox, ect..all sorts of scandals. So, when marketing bitcoin, people are now talking about "blockchains" and not "bitcoins"

This is not why banks and companies are talking about blockchain.

The blockchain technology provides an accounting system that is more difficult to manipulate or fraud and is cheaper to maintain - because you don't need a bunch of auditors making sure that all the transactions are legit! This is why banks and companies want to use blockchains for their transactions. It increases accuracy, lowers risk, and lowers costs (read as increased profit!)

Banks don't even want to be involved in an alt coin (as some have mentioned here). They just want to do business more efficiently, especially if it saves them money.

[beepboopbeep]

They are using the concept of the blockchain for alternative uses, not for cryptocurrency itself. I think it is pretty neat.

[jaberwock]

Because they know how slow and expensive wire transfers are, and more for certain parts of the wold.

Blockchain is like a miracle, you can send anything quickly and paying the same to anywhere

[franky1]

Banks don't even want to be involved in an alt coin (as some have mentioned here). They just want to do business more efficiently, especially if it saves them money.

but creating their own ledger IS an altcoin (technically)

[Harry Hood]

Banks don't even want to be involved in an alt coin (as some have mentioned here). They just want to do business more efficiently, especially if it saves them money.

but creating their own ledger IS an altcoin (technically)

No it isn't. A ledger is a record of accounts. An altcoin is currency used in trade for goods and services. They are very different things.

[Kprawn]

The Blockchain technology offer a cheaper alternative over SWIFT but the Bitcoin Blockchain are not controlled by them. Imagine building your whole banking transfer system on

something that may change tomorrow and destroy your business. There are too many external factors influencing Bitcoin. They want to be in control of everything... from the

development to the node administration. They have loads of money and can decentralize nodes at branches all over the world. The Libertarian and Anarchist background of

Bitcoin, does not count in it's favor, when banks have to make these decisions.  

[Harry Hood]

Questions is, will the general public prefer a decentralized blockchain instead of a private one?

The public won't have a choice or say in what transaction technology a bank chooses to use for the transactions inside its bank. It's not about public or private, it's about efficiency and accuracy and risk (reduction).

[Kprawn]

I've read literally dozens of articles on Coindesk, Bitcoinmagazine, and other Bitcoin-related sites and they are inundated with articles about how X bank wants to start using blockchain technology.

But in all of those articles I couldn't find a decent explanation as to why a bank would want to use their own blockchain instead of using Bitcoin. For example, we know that a blockchain is made more secure if more independent nodes are in operation. So does the bank plan on setting up lots of their own nodes for their own blockchain, and/or making any person who wants to use their services do so through the person's own node? Neither of those sound like a good plan, but in all that I've read, nobody has explained why/how a bank would secure and use their own blockchain.

I'd appreciate anyone's answer, or a link to an article that explains this.

Questions is, will the general public prefer a decentralized blockchain instead of a private one?

Unfortunately the general public will trust well known banks more than a trust-less decentralized blockchain.
Therefore the answer is probably no.

The banks will implement this without the public knowing this. The general public has no clue what SWIFT is, but they still use the bank services. If the banks change this

service, nobody will know the difference. The cost will be cheaper and the profit will increase and the clients will see no benefit from this. Eg. Lower fee's.

They will milk this technology and use it to their advantage, and if they have their own private Blockchain... nobody can stop them.  The technology that was supposed

to disrupt them, will be used to increase their profit and make them even stronger. 

[kpitti]

I've read literally dozens of articles on Coindesk, Bitcoinmagazine, and other Bitcoin-related sites and they are inundated with articles about how X bank wants to start using blockchain technology.

But in all of those articles I couldn't find a decent explanation as to why a bank would want to use their own blockchain instead of using Bitcoin. For example, we know that a blockchain is made more secure if more independent nodes are in operation. So does the bank plan on setting up lots of their own nodes for their own blockchain, and/or making any person who wants to use their services do so through the person's own node? Neither of those sound like a good plan, but in all that I've read, nobody has explained why/how a bank would secure and use their own blockchain.

I'd appreciate anyone's answer, or a link to an article that explains this.

Questions is, will the general public prefer a decentralized blockchain instead of a private one?

Unfortunately the general public will trust well known banks more than a trust-less decentralized blockchain.
Therefore the answer is probably no.

The banks will implement this without the public knowing this. The general public has no clue what SWIFT is, but they still use the bank services. If the banks change this

service, nobody will know the difference. The cost will be cheaper and the profit will increase and the clients will see no benefit from this. Eg. Lower fee's.

They will milk this technology and use it to their advantage, and if they have their own private Blockchain... nobody can stop them.  The technology that was supposed

to disrupt them, will be used to increase their profit and make them even stronger. 

There is a taff competition on banking market now. The are definitely looking how to cut costs, no doubt about it.
If only one bank will implement own blockchain technology it will not help him too much. They need to cut cost of interbanking transfers and therefore all will need to use the same blockchain.
Blockchain is technology which is proved to be working well. It can be benefit for large international bank to implement such technology for themself.

[hl5460]

According the Q3 Report of HSBC, they had spent 9 billion on operation cost. I guess that's why they are so excited about the cost-reduction technology that's called "blockchain".

[Searing]

I've read literally dozens of articles on Coindesk, Bitcoinmagazine, and other Bitcoin-related sites and they are inundated with articles about how X bank wants to start using blockchain technology.

But in all of those articles I couldn't find a decent explanation as to why a bank would want to use their own blockchain instead of using Bitcoin. For example, we know that a blockchain is made more secure if more independent nodes are in operation. So does the bank plan on setting up lots of their own nodes for their own blockchain, and/or making any person who wants to use their services do so through the person's own node? Neither of those sound like a good plan, but in all that I've read, nobody has explained why/how a bank would secure and use their own blockchain.

I'd appreciate anyone's answer, or a link to an article that explains this.

If the banks had found bitcoin method and blockchain first..they would have 'patented it" ..the only thing the banks find wrong with bitcoin and blockchain is that they did not think of it first...If for example 'closed crypto" bank blockchains win and banks get 'evil' bitcoin banned or not used...it will be like the billionaire bankers then would  be the trillionaire bankers in 10 years...because they would have all this ease of use/blockchain benifits/etc on the xfer of money and they would NOT CHANGE THE FEES...so free and easy way to move $$$ via banks on same fees w/o hassle of as many humans and such with the blockchain and at no cost..but best of all PRIVATE ..they make lots and lots of money

So the banks have NOT imho pushed back yet against bitcoin yet (they will) the claim will be trust our bank blockchain pos coin or whatever ..btc is evil (see puppies in banker tv ads to prove it)

so there is a fight between open crypto (btc/ltc etc) and closed crytpo and imho it has NOT started big time yet..if the banks get a closed crypto they can use to supplant bitcoin imho it will be like a blade runner (movie) world of the future....1% of the worlds population will own 99% of the wealth because how money moves and the fees that are charged would be massive under a bitcoin type blockchain that was private imho

so that is the war in my view is crypto going to be 'open' (masses) or 'closed' (the elite few)

[CoinNation]

Yeah, I can understand that. But many of these articles say that X bank wants to develop their own blockchain. That's what I don't get...how it would be secured. Plus, it's a central authority which defeats one of the primary purposes of Bitcoin. None of the articles has addressed that aspect either.

When banks develop their own chain, it is not necessary for the crypto currency. It is an internal ledger system. This will reduce their current cost.