Block chain technology for USD/Euro/Etc being developed by IBM and central banks

[Cryddit]

http://www.reuters.com/article/2015/03/12/us-bitcoin-ibm-idUSKBN0M82KB20150312

It looks like Bitcoin managed to get the attention of some large players, and IBM is interested in developing the block chain technology for use by central banks. 

The idea is that there'd be a block chain used to transfer value, denominated in conventional central-bank issued currencies, around between banks.  "Like Bitcoin, but without the bitcoins." 

Amongst other things they'd be relying on a network of authorized notaries (with verified real-world identities and subject to prosecution for nonperformance) rather than proof-of-work, so their chain security costs would be considerably less -- theoretically measured in prosecution and imprisonment costs, but in practice the notaries have approximately nothing to gain and a 100% chance of being caught, so I'd expect the prosecution and imprisonment costs to be far less than Bitcoin's combined investment in mining equipment. 

That makes it more efficient than Bitcoin for doing what Bitcoin does.

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[CIYAM]

The very simple problem is going to be "corruption".

How are they going to convince anyone that their system isn't corrupt?

Without using an acceptable non-centralised solution (which is pretty much just Bitcoin at the moment) you simply can't trust it.

So you can be much more efficient than Bitcoin but you lose all credibility in doing so (thus even trying to make that a "sales point" looks weak).

[nextgencoin]

The very simple problem is going to be "corruption".

How are they going to convince anyone that their system isn't corrupt?

Without using an acceptable non-centralised solution (which is pretty much just Bitcoin at the moment) you simply can't trust it.

So you can be much more efficient than Bitcoin but you lose all credibility in doing so (thus even trying to make that a "sales point" looks weak).

If central banks are involved why would anyone even think it won't be corrupt. The FED at its core is by definition a corruption of sound money.


I'm afraid this is exactly what I expected the FED would do.

[Cryddit]

I don't think so actually.  An open ledger, which anyone can save at any time and compare to the public ledger at any later time, goes a long way toward convincing people that funny stuff ain't happening.  

If Bitcoin actually brings about a degree public accountability and gets central banks using a common, open ledger, then it will have done a hell of a good thing regardless of what happens to bitcoin as an actual currency.

The funny thing about this is that cryptographers have been proposing hash chains to secure ledgers and other history for ~25 years, and been firmly ignored until something like Bitcoin that uses exactly that tech (plus Proof-of-work) got big enough to bring it to the attention of people like IBM.

 

[nextgencoin]

I don't think so actually.  An open ledger, which anyone can save at any time and compare to the public ledger at any later time, goes a long way toward convincing people that funny stuff ain't happening.  

If Bitcoin actually brings about a degree public accountability and gets central banks using a common, open ledger, then it will have done a hell of a good thing regardless of what happens to bitcoin as an actual currency.

The funny thing about this is that cryptographers have been proposing hash chains to secure ledgers and other history for ~25 years, and been firmly ignored until something like Bitcoin that uses exactly that tech (plus Proof-of-work) got big enough to bring it to the attention of people like IBM.

 

If the FED simply thougt Bitcoin was a good idea and wanted to harness it then why not just use Bitcoin?

Sorry but thinking the FED is going to have some kind of open ledger or not have the ability to make more coins as it wishes is living on a cloud in La La Land.

[yayayo]

IBM's "idea" is to remove the most important feature of Bitcoin: decentralization.

It's essentially a downgrade... some fiat 1.5.

Why not simply use Bitcoin instead?

ya.ya.yo!

[nextgencoin]

IBM's "idea" is to remove the most important feature of Bitcoin: decentralization.

It's essentially a downgrade... some fiat 1.5.

Why not simply use Bitcoin instead?

ya.ya.yo!

Decentralisation will be so easy for the FED and the media to discredit. All they have to say is it's not safe to the masses while this new coin which we can control and regulate and you won't ever lose.

I hope you get my point that the best thing about Bitcoin can easily be turned to a negative to the masses. I think you are overestimating the masses honestly.

[Snipe85]

This was to be expected as the banking system relies on full control. As the Cyprus crisis has shown us when we keep the money in the bank we not only have to worry about the economic aspects like inflation but also the bankers themselves, who in cooperation with the government can seize our funds. They can't do it with bitcoin and it bothers them. None of the current Bitcoin users is going to buy into their centralized shit.

[croato]

They just want to use blockchain technology to make payments if i got it right. Bitcoin is currency and it is decentralised so i guess they can not compete with even in their wet dreams.

[BitcoiNaked]

IBM's "idea" is to remove the most important feature of Bitcoin: decentralization.

It's essentially a downgrade... some fiat 1.5.

Why not simply use Bitcoin instead?

ya.ya.yo!

yeah but tell that to the millions of sheeps

[Snail2]

IBM isn't a assembly of marketing geniuses. If they doing things as usual then apart from a few geek magazines and some of their high profile clients nobody will be aware of this new coin.

[Bytty]

Bitcoin/blockchain technology has many applications, we've already seen a few, Twister, Bitmessage, Ripple, Storj, and I predict we will see a lot more in the future.

It's always exciting some big company taking interest in this technology, we appreciate the publicity.

[Carlton Banks]

If Bitcoin actually brings about a degree public accountability and gets central banks using a common, open ledger, then

possibly the most opaque (ostensibly) public institution, adopting the most accountable and public innovation in data management? Nuh.

The funny thing about this is that cryptographers have been proposing hash chains to secure ledgers and other history for ~25 years, and been firmly ignored until something like Bitcoin that uses exactly that tech (plus Proof-of-work) got big enough to bring it to the attention of people like IBM.

Now that's interesting background. Which kind of suggests that the top cryptography guys don't end up employed in any kind of R&D management roles at places like IBM, which is kind of surprising.



Not really interested in this though, it's hardly going to be non-political or free market. Still betting that the best decentralised solution will prevail. At any given time.

 

[Cryddit]

Ironically enough, the central banks want decentralization -- badly -- when dealing with each other.  "who has control" is a very hot potato indeed at that level.  So they're looking for a decentralized solution, not for use by customers, but for use among themselves.

It won't be bitcoin, because that would involve giving a lot of money to people who already have bitcoins and haven't done much of anything for the central banks.  Bitcoin holders are not seen as stakeholders in international finance, and are not entitled to anything by their lights.

They're just going to use the open-source technology to solve a problem among themselves - it sidesteps the burning problem of who has control in a closed-ledger system. 

Their customers, on the other hand, don't see the central banks' control as a problem, and mostly don't give a crap about such esoteric properties.  They aren't ideologues; heck, most of them aren't even idealists. They are what we call the mainstream. 

[BitcoinHeroes]

RDN is doing this with a new analytical blockchain, this is my baby project

https://rdnpay.com:3000/

[Carlton Banks]

They're just going to use the open-source technology to solve a problem among themselves - it sidesteps the burning problem of who has control in a closed-ledger system.  

I don't see how appointing trusted agents to run the network supernodes could possibly achieve that, it's a reinvention of the same problem. Without open access p2p and competition to secure the network, it would end up top-down again. There will be too many humans making decisions that with Bitcoin would be dealt with by the software as a part of the protocol.  

[Cryddit]

Notaries are not trusted agents.  They don't make decisions, they just serve as public witnesses to a state of affairs.  A notary signs a copy of the block chain, he keeps the copy, and thereafter if someone attempts to change history the notary can prove that it was changed.  They have literally *zero* ability to make decisions about the content of what they're witnessing.   Nor do they have the option of producing a backdated signature, because their signature is part of the content that other notaries sign. 

Anyway, notaries are "trusted" to about the same extent that the bitcoin network itself "trusts" proof-of-work, which is essentially what they're replacing in the proposed system.  A notary gets about as much input into fiscal policy decisions as an antminer box.

Now, the banks themselves will be making decisions of the sort that the bitcoin community does not desire - they will be choosing, for example, when and by how much to inflate their currency supply.  You can argue that this isn't "ideal money" or that it fails in some ideological way, but why would they give a crap?  Also, whether you like the long-term inflationary effects or not, their adjustments of money supply *do* usually stabilize the value of fiat a lot in the short term.

If it does roll down to the level of consumers, Homer and Harriet Normal, who really and truly don't give a crap about "Ideal Money" and are entirely comfortable with moderate rates of inflation, will find something in familiar denominations, easily convertible at the bank for convenience, accepted on pretty much every payment network, and stable in value relative to the currency they're used to.  For them, it's cheaper than their credit cards and a slam-dunk advance in convenience over Bitcoin.

The important thing to me though, is that the chain of cryptographic hashes, treating "proof-of-notarization" as a basic protocol primitive, ties the central banks to an irrevocable public ledger.  The decisions they make are published, can't be kept secret or later denied, and because notaries have authenticated identity and can go to jail for false witness, "proof-of-notarization" is as hard to fake on a day-to-day basis as proof-of-work on an hour-to-hour basis.  You just aren't going to be able to subvert enough of them, enough of the time, for long enough, to get an attack chain accepted.

[thejaytiesto]

This is the current opposite of what Satoshi wanted. Trying to emulate the fiat system within the blockchain is the ultimate non sequitur... it absolutely defeats the purpose. I hope people don't buy on this crap.

[Cryddit]

This is the current opposite of what Satoshi wanted. Trying to emulate the fiat system within the blockchain is the ultimate non sequitur... it absolutely defeats the purpose. I hope people don't buy on this crap.

As for what Satoshi wanted, I don't know.  He didn't spend much time talking about ideology; that was all Hal.

Other than that, your mistake is in thinking that money has a purpose.  It is people who have purposes.  Money is absolutely the purest form of what it means to be merely the means that people use to achieve their ends. 

[manselr]

This is the current opposite of what Satoshi wanted. Trying to emulate the fiat system within the blockchain is the ultimate non sequitur... it absolutely defeats the purpose. I hope people don't buy on this crap.

As for what Satoshi wanted, I don't know.  He didn't spend much time talking about ideology; that was all Hal.

Other than that, your mistake is in thinking that money has a purpose.  It is people who have purposes.  Money is absolutely the purest form of what it means to be merely the means that people use to achieve their ends. 

There's an ideology behind everything. I don't believe in this notion that money is magically neutral to ideologies.
Im pretty sure satoshi was more of an anarchist at heart, and didn't want bitcoin to end up like what bill gates wants.