Blockchain could change the face of finance

[universal4]

http://www.cbsnews.com/news/bitcoin-...ilicon-valley/

Attendees included representatives from heavy hitters like the Nasdaq, Visa, State Street, Fidelity, Citigroup, First Data and Fiserv.

The big players seem to be much more interested in attending meetings about the use of blockchain technology, then they are about bitcoin, or any other currently used crypto-currency.

The executives at Chain's April meeting all had one thing in common, according to Ludwin: all of them understood blockchain's potential.

Blockchain technology could reshape the financial industry well beyond the payments system; it has the potential to change the face of modern finance."

That says "blockchain, not bitcoin.

While bitcoin still grabs headlines, when it comes to the future of cryptocurrency, we might be missing the more interesting story.

"All the noise about bitcoin has crowded out discussion of the new technology," Wessel said.

I have long said that the blockchain technology is the most important point, and whether "bitcoin" itself survives is not as important as the technology (the blockchain and the use of the distributed ledger) being integrated is most likely the future of banking.

Hopefully at some point companies like "Chain" and large consortium's like "R3CEV", will come together more on standards since having numerous groups and code bases could slow development as well as interoperability between financial institutions.

Rick
Universal4

[Sherlock]

I remember one brilliant article (can not find it) that was about the names bitcoin vs. blockchain. In short it said: there is a lot of bad feeling about bitcoin, it is better to call it blockchain, especaly when we talk with banks. So that is point number one. The corporate rats now talk about blockchain, instead of bitcoin, even when nobody has a clue what is blockchain and what is bitcoin. Bitcoin is after all just some blockchain. That is part of the magic.

Another point is that so far only bitcoin is being used as money. Surge of ethereum is amazing, and the downfall will be as well. Each month some new prophet like the idiot Hearn from R3CEV who said this is the end of bitcoin emerge. Before, it were the guys from Ripple (not even one year ago). Ripple went up, there was a lot of talking how it is disruptive fintech blah blah. Then they came with the policy that each ripple node has to be verified via their KYC and the wave immediatelly fell apart.

For me this is all nonsense. There is a strong need for cryptocurrency, that will be bitcoin and maybe some new generation altcoin. That cryptocurrency will be used for shady transactions like getting commissions from US gambling affiliates. There are lot of businesses like that, it can be low tens of % of worldwide GDP. That is the area, where bitcoin is needed. Nobody will talk about that openly, because nobody needs to provoke governments and nobody needs approval.

Blockchain technology is too costly for normal financial operations. As long as there will be banks as centralised financial hubs, we will not see general use of blockchain. It is too robust and expensive. Analogy: Netflix is not using torrents, the banks will never use blockchain. It is possible that banks will cease to exist, but nobody talks yet about such eventuality.

What you quote here is pure PR article of people who are a bitcoin fallout that is doing the startup games. In real economy, it is all about bitcoin if we talk about alterantive monetary systems. Silicon valley startups are just about to collapse and so will their pre-mined wannabe cryptocurrencies.

if someone is interested, why no other blockchain will kill bitcoin, here is one great article (albeit very simple)

[universal4]

The "blockchain" technology does NOT always mean bitcoin.

In simple terms, blockchain technology can and most likely will use a form of the public ledger with the possibility of transaction verification in a distributed form similar to the way bitcoins are mined.

The entire financial industry, as well as wall street and even the real estate sector understands and are studying ways to implement "block chain" technology not bitcoin.

I think banks and other financial institutions are studying blockchain technology because they see ways they can use it LOWER their long term costs, whether they will be able to leverage that or not remains to be seen. I do NOT see those investigating this technology as doing it because they feel they are "bitcoin fallout" but they are doing so because the underlying technology has potential.

Rick
Universal4

[Sherlock]

I do not know why you say such obvious thing like that blockchain is not bitcoin. Are you arguing with me? Never said that.

No, the entire financial industry and wallstreet certainly do not study blockchain. They just corrupt second grade journalists that try to create an impression that banks take the blockchain seriously. It is not hapenning. The article is not some independent analysis. It is part of R3CEVs' fundraising campaign. Probably paid.

Maybe they have some part time PhD student in each of quoted banks, maybe R3CEVjust talked with someone from each bank at some conference and asked if they can use their logo (and the bank agreed because it looks cool), but since they do not produce anything more detailed than those promo articles, I am saying bullshit. It is just good marketing that started with the R3CEV/Hearns lunatic call that here is the end of bitcoin. Yes, sure: whole US gambling is heading towards bitcoin, but it will surely end. This propaganda is so obvious. I feel awkward just to think that someone can take the article seriously.

No, I said you numerous times, that blockchain does not lower the costs, it is a mystery, yet you just repeat over and over that nonsense. Blockchain technology is much more costly than recent straight technology and only market forces and overregulation can justify such technology to exist, so the higher costs are justified. You can not have decentralization and lower costs at once. It is obvious. There is a tradeoff between decentralization and costs. It is the nonsense that blockchain enthusiasts repeat over and over. "We will have something independent and cheaper". No. We can have something independent, but it will come with a price. And that that price must be somehow justified. Like the high price of bitcoin transactions (bitcoin users do not pay it yet in full) is justified by regulations of money flows, where people can not pay with the normal kind of money. But banks - at least the quoted banks outside of Russia, North Korea etc. - do not need to be out of the moneyexchanging system, because they are the system. So it has no sense for them to pay for higher costs.

Just a side note: the high costs of bank, e.g. how much they charge customers = fees, have nothing to do with the internal costs of technology. The costs of the technology, the price of current electronic transactions, is already very low. The fees are high, because banks are oligopolies that can afford to charge high prices and also because banks have many employees, but not that they pay high fees for the transactions. The costs of running the transactions quite very low. After all it is just a few certificates and small IT teams that is needed for current transactions. That is a small % of overall banking costs. The salaries of managers and clerks and rentals and marketing costs are much much higher costs of bank transactions. And those would be the costs even if different technology for money transfers is adopted.

[universal4]

You quoted an article that you thought was brilliant that stated many bitcoin promoters would rather it was promoted as blockchain than bitcoin.

In short it said: there is a lot of bad feeling about bitcoin, it is better to call it blockchain

The problem with that is that all other secondary crypto-currencies are also using blockchain technologies.

I do think that in the end banks and other financial institutions will be able to use this technology and that it will save them money. I agree that any savings will most likely not be immediate, that is why I said:

I think banks and other financial institutions are studying blockchain technology because they see ways they can use it LOWER their long term costs, whether they will be able to leverage that or not remains to be seen.

If the financial insitutions are able to use a "distributed" system similar to that of most current crypto-currencies, where the infrastructure is spread out and distributed among many, where no single entity has to cover the entire costs of the computer infrastructure, then that certainly could lead to savings.

Having a single ledger that would possibly be publicly scrutinized could possibly also lead to reduced fraud, which could lead to savings, but I am sure in the short term this would lead to much higher costs in security and development.

I think these are some of the things they are currently studying.

In my opinion I am not stating nonsense, and in my opinion trying to rename "bitcoin" "blockchain" when almost all other crypto currencies could easily be named that also is nonsense.

Whether the piece written for CBS was a bit of fluff could easily be debated, but I agree most journalists add their own flair of fluff with everything they write. I have yet to see a single article that is on the positive side of bitcoin that is not full of fluff about it's the greatest thing since sliced bread, but many still prefer making their own.

Rick
Universal4

[Miles_FTA]

Look to be honest i cant sit here and say i know much about this technology or Bitcoin. What i can say is if it lasts and if it takes off which it seems it has and will continue to grow then maybe its great for our industry we need ways to get funds to affiliates when countries are blocking us at all avenues so its a welcome chnage However I do worry about the stability as well something that isn't controlled can sometimes be dangerous anyways i actuality wanted to ask if anyone was aware of Ethereum and how it differs from Bitcoin ?

[universal4]

Ethereum is also a crypto currency that uses "blockchain technology"

It is also mined in a similar fashion as bitcoin, although Ethereum has it's own independent blockchain.

Here is the wiki on it if it helps answer the basics.
https://en.wikipedia.org/wiki/Ethereum

There are literally thousands of crypto currencies, of course most of them are total failures both in acceptance and usages. Only 9 have market caps of over 10 million dollars and only a total of 16 have market caps over 1 million.

here is a list of over 3000
http://www.cryptocoincharts.info/coins/info

And the wiki list has not been updated in quite some time lists 600 plus and has a chart with 20 or so with their launch dates.
https://en.wikipedia.org/wiki/List_of_cryptocurrencies

Rick
Universal4

Side note: dodgecoin has the coolest coin logo

[SuperiorShare]

Haha. Dogecoin was developed by a guy I know named Jackson Palmer. He actually hates Bitcoin and the Crypto community and made it as a joke (the dog meme). It took off and actually did well for a while, but then Jackson bailed out because the crypto industry is full of... well... interesting people.

[SuperiorShare]

Ethereum is a crypto (ether) but it's a blockchain to allow the execution of smart contract. This is why R3, the banking consortium are focusing on Ethereum for the future of banking systems. But every day a new blockchain innovation in announced. It's an amazing time. Multiple $ trillion industries will probably transition to blockchain over the next 10 years.

[TheGooner]

I'm still trying to understand how block-chain will change finance / insurance or any of the industries touted.

The reporting is hype without substance - it goes on breathlessly about how many venture capitalists are "looking at", "investing", "examining" the blockchain concept for commerical use - but I can never find any substantive discussion on WHAT will be done.

Does anyone have some concrete examples or discussions on WHAT exactly it is that blockchain will do / replace - and how it will be better for the business and end users ?

Bitcoin is probably the best example of a widely adopted blockchain but it's doing a very tiny fraction of current finance transactions - is struggling with volumes (takes 10-15 minutes to get confirmations) and there is talk of fees having to rise significantly to pay miners because of the up coming block halving.

I've read about Etherium too - this "smart contract" sounds like facinating sh!t - but it's currently a nerd tool for creating a VERY, VERY slow distributed computer. Does anyone have good articles on WHAT it will replace / create / introduce that is so exciting?

[universal4]

You may have already read a few of these, and I agree there is still much to be learned and studied concerning the use of blockchain for (non bitcoin) usage, but I think we will see more and more tests as well as much more

"looking at", "investing", "examining"

Public and Private Blockchain Concepts and Examples
https://letstalkpayments.com/public-...-and-examples/

Private blockchain as a concept is still in its nascent stage and the number of firms working on this concept is expected to grow multi-fold in the next 2 years.

Containing a few of the same charts this one went into a few more examples of uses
https://letstalkpayments.com/an-over...in-technology/

This one fits the "looking at", "investing", "examining"
http://phys.org/news/2015-12-blockchain-bitcoin.html

This article attempts to dig slightly into "potential uses"
http://p2pfoundation.net/Blockchain

For those needing an introduction to blockchain with an explanation of some off the concepts
https://bitsonblocks.net/2015/09/09/...in-technology/

Rick
Universal4

[SuperiorShare]

Think about any system in the world that requires trust. Blockchains create trustless systems. I recently did a domain sale using the bitcoin blockchain to record the transaction. The process was pieced together using various tools currently available and we also had a contract, but it's possible to eliminate the contract and replace the escrow process in the future with blockchains. Notaries are no longer necessary. As you're aware, it's a pretty big deal.

[Sherlock]

Yes, notaries are no longer technically necessary, but the question is where they are now restricted. The centralised system is cheaper, so there must be some major restriction, so the new technology would overcome something. We can also make gold from Uranium, but it does not pay off.

The money now is restricted, so without a doubt there is a use for blockchain as money with one decentralised layer (and on the top of that will be probably built centralised layers: e.g. most people will use centralised online wallets, or semicentralised software wallets). But is there such incentive for smart contracts? Maybe in North Korea or similar countries where there are restrictions for ownership.

I mean I would really love to have domain-blockchain instead of ICANN, but is there enough incentive for mass adoption. I am from the 1st second sure that money-blockchain is needed. But I am not sure that there are enough obstacles yet for smart contracts. Maybe I just lack imagnation. I would love to hear arguments (even if I have to be horrified that I missed ETH for 1/10 of current price).

So it is not "Think about any system in the world that requires trust." It is "Think about any system in the world that requires decentralised trust."

[SuperiorShare]

So it is not "Think about any system in the world that requires trust." It is "Think about any system in the world that requires decentralised trust."

Good point.

[yasmin91]

In the digital realm, a revolution was brewing, promising to reshape finance's very core. Blockchain, a decentralized ledger, emerged as a beacon of transparency and security. Banks adopted it, transforming transactions into immutable blocks, eliminating fraud, and slashing costs. Peer-to-peer transfers became instant, global, and fee-free. Trust in financial systems was restored, empowering the unbanked. The face of finance changed, becoming inclusive and efficient, all thanks to the unstoppable rise of blockchain technology.

[content]

Blockchain technology is too costly for normal financial operations. As long as there will be banks as centralised financial hubs, we will not see general use of blockchain. It is too robust and expensive. Analogy: Netflix is not using torrents, the banks will never use blockchain. It is possible that banks will cease to exist, but nobody talks yet about such eventuality.

I agree with the general sentiment of the post, though in my opinion blockchain can be deployed in a less expensive(in regards to network needs) form than the bitcoin network with just as robust functionality.

People look at bitcoin and see the vast mining industry and the extensive computing power and electricity to run it, though in reality the mining network is that vast not out of necessity of blockchain's basic functions, but out of competing for block rewards/profit motive and the resulting ever increasing block difficulties(combined with ever increasing improved hardware).

Bitcoin is great for autonomous decentralized system which records can be public facing without risk of vulnerabilities, and bitcoin serves that purpose to an arguably over-kill extent in regards to the amount of processing that goes into encrypting it due to such high difficulty levels. Though financial institutions don't necessarily need something that is completely decentralized, autonomous, or as public facing.

More private and controlled versions of blockchain can be deployed with private nodes and closed networks and still be generate and keep track of provably non-fungible records, with 1/100,000,000th of bitcoin's hashpower and still have more advanced features like ethereum's smart contracts functionality(the processing power required to execute the functions of smart contracts is negligible compared to the arguably excessive levels of encryption determined by the difficulty of the a block - based on how many people are mining which is based on profitability).

Maybe we wont see blockchain use in regards to all accounts and all transactions for traditional bank networks, though I think it may be useful for some of their database systems, or even just as backup to existing systems. Blockchain is more or less a concept for immutable record keeping and software to achieve that, though doesn't need to be something every bank user and bank teller needs to actively engage with in forms we are accustomed to for it to be used by financial institutions. It may still be costly just because they will spend huge amounts on R&D and consulting, but practically speaking in regards to running blockchain network for institutional use doesn't need to be as costly as is for bitcoin miners.

I'm not really disagreeing with you're general thesis, though I do think mainstream financial institutions will use some forms of blockchain technology for databasing purposes - behind the scenes within their institutions for regular financial transactions(rather than necessarily coins issued by the financial institutions or government being transacted in blockchain wallets that we are familiar with and that users actually actively interact with).

Cryptocurrency transactions (with traditional crypto wallets as we know them) being used for everyday use for normal transactions is a whole different story.

[lithejed]

It's fascinating to see the ongoing debate between Bitcoin and blockchain, especially in corporate circles where the terminology seems to carry weight. While some advocate for rebranding Bitcoin as blockchain for smoother integration with traditional finance, others argue for Bitcoin's unique role as a cryptocurrency. The discussion around the practicality of blockchain for everyday financial transactions versus its current use primarily in cryptocurrencies like Bitcoin is thought-provoking. However, dismissing blockchain's potential based on its current costliness overlooks its disruptive capabilities and the possibility of future evolution. This underscores the importance of staying informed about the intersection of blockchain, cryptocurrency, and cybersecurity, as highlighted by resources like HotCoinPost. Whether discussing the future of finance or the nuances of decentralized technologies, it's clear that this conversation is far from over. HotCoinPost provides a comprehensive platform for exploring these complex topics further.

[universal4]

Reminding everyone, that except for the last few posts, this thread was started back in 2016.

Much has changed with the banking industry as well as the entire crypto space.

It is interesting to look back over some of the thoughts though and am intrigued what the future may bring in the space.

Rick
Universal4