Banks Adopting Blockchain 'Dramatically Faster' Than Expected

Banks and other financial institutions are adopting blockchain technology "dramatically faster" than initially expected, with 15 percent of top global banks intending to roll out full-scale, commercial blockchain products in 2017, IBM said on Wednesday. Reuters reports: The technology company said 65 percent of banks expected to have blockchain projects in production in three years' time, with larger banks -- those with more than 100,000 employees -- leading the charge. IBM, whose findings were based on a survey of 200 banks, said the areas most commonly identified by lenders as ripe for blockchain-based innovation were clearing and settlement, wholesale payments, equity and debt issuance and reference data. Blockchain, which originates from digital currency bitcoin, works as an electronic transaction-processing and record-keeping system that allows all parties to track information through a secure network, with no need for third-party verification.

Not Faster Than Expected

[Anonymous Coward]

The government wants its cut so of course it's going to pressure those agents of financial control to adopt (exploit) the technology quickly. They failed to reign in the internet quickly enough--arrogantly believing no individual would ever have a personal use for it. They won't make that mistake with blockchain technology. Though honestly (thankfully) it's probably already too late.

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[ChunderDownunder]

The rein in Spain reigns mainly on the rainy plain?

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[TheRaven64]

Your comment makes no sense. They're not talking about adopting BitCoin as a consumer payment system, they're talking about adopting some of the underlying technology for bank-to-bank transfers.

Two days after a blockchain editing was announced.

[Nutria]

This won't end well.

Re:Two days after a blockchain editing was announc

[PRMan]

An editable blockchain is not a blockchain.

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[goombah99]

Yes but don't worry, Allsafe is managing it and there's this whiz kid Elliot Alderson that keeps the E_coin locked down so no one can unwind it.

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[Gussington]

I find it hard to see how this would ever gain traction. Why would any organisation invest in a trust mechanism that has been butchered to make it less trustworthy? Especially when more trustworthy version are already in being used.

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[javaman235]

The comment above about Elliot Anderson and E-Corp references the show 'Mr Robot', a hacker TV series where an Evil Corporation has its hands in hacker activities, to create crisis it can exploit. It rolls out a cryptocurrency called E-coin, leveraging the trust in bitcoin and recent hacker attacks against it to make it a popular safehaven currency. This principle works because the brain is implicitly Bayesian: it makes decisions off probabilities based on prior experiences. Those priors are adjusted after

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[Gussington]

Since Bitcoin built trust in the tech, people will trust new blockchain tech after bitcoin, even if its not as good. Not saying that's what these banks are doing, but if it is, that's how it works.

I get what you are saying, but most people don't know what Bitcoin is. Even a lot of those that do don't fully understand how it works, so I'm not so sure Bitcoin has any reputation value yet. So far it has attachments to drug dealers and now high finance, the two least trustworthy fields out there.

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[Anonymous Coward]

Ginni Rometty, at Sibos yesterday, said IBM opposes mutable blockchains.

Will their implementation allow tracking?

[Anonymous Coward]

When banks implement blockchains, will their version allow tracking of all the individuals involved in the whole chain? If they claim to be doing this for security and not privacy, there's no reason to expect that they won't want to build in features to track everything. We definitely know that they have different requirements from the people that developed the original blockchain implementations. They could claim that they want to be able to detect money laundering. Given how insecure their current sys

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[AHuxley]

Tracking, blocking, structuring (surfing) reporting on any amount and amount, chat downs over any transaction amount with staff.
Everything your US bank has to do for the federal gov in the US today will be ready for any other payment products.
No payments to or from some nations. Full complacence and profit taking will be designed into every new product offered.
Micropayments with a bank without the external CC networks and their profit layer.
Everything will be just like a traditional bank service but

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However: "The security aspect of cyber is very, very though." -- Donald Trump, cyber expert

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[TheRaven64]

When banks implement blockchains, will their version allow tracking of all the individuals involved in the whole chain?

Of course it will. They want to use a blockchain for maintaining an efficient high-speed ledger of all bank-to-bank transactions. When you do a funds transfer from, for your account to an account at another bank, they'll write an entry to the block chain and both parties will be able to validate the time at which the transaction occurred. Having an unforgeable ledger is the entire point of the system that they're proposing.

What exactly are they doing with it?

[rsilvergun]

It's a distributed trust network, right? Why would banks that survive on trust want that distributed?

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[Gussington]

Ok I'm not an expert but from what I understand Blockchain is a robust accounting mechanism. Currently Banks use spreadsheets and text files and allsorts of other caveman technology to keep and compare records. Blockchain is better at this so why wouldn't you use it?

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[invid]

It's all fun and games until quantum computers break these chains.

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[Gussington]

It's all fun and games until quantum computers break these chains.

Again I'm no expert, but there is no 'cracking' of a chain because you need to also own a majority of the miners that validate the chain in order to alter it. Either way, it's more robust than Excel so it can only be a step forward.

Re:What exactly are they doing with it?

[rockmuelle]

IBM is using blockchain as a distributed, digital ledger service. The basic idea is to create new blockchains for different domains (think of Bitcoin as a blockchain for digital currency) and the use those within a community as ledgers to track transactions (for example, all real estate transactions could be added to the real estate blockchain). They're developing ways to also include rules for transactions to only allow updates to the chain if certain conditions are met.

Source: I sat through many presentations on this at IBM Edge last week.

I'd type more, but I'm on my phone... Google IBM and blockchain to see more. It's actually pretty interesting.

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[Dog-Cow]

There's also no reason for society to allow you a pain-free existence.

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[Troed]

Why would anyone spend hashing efforts on those blockchains? And if you "solve" the need for hashing by making the blockchain private within a group of companies, where you expect none of them to attack the blockchains integrity, then your product is no different from having a MySQL database with restricted login ...

The reason Bitcoin exists is that they're the tokens distributed to make people spend efforts on hashing the blockchain. Without tokens you have no hashing. A blockchain thus cannot exist withou

Re:What exactly are they doing with it?

[Kjella]

It's a distributed trust network, right? Why would banks that survive on trust want that distributed?

Well there's two parts to it, one is the "chain" property where like git's commits it's not possible to edit one transaction later and have it go unnoticed. You can run independent background audits that confirm that this blockchain state corresponds to these transactions and account balances. It's a lot more difficult than adding one fraudulent transaction by itself, like that somebody deposited cash in your account when they never did. Obviously if you can add "genuine" transaction to the chain that's different, but they can be validated in the process.

The other part is inter-bank transactions where it's essential that everybody agrees on the state of affairs. I wouldn't use the "proof of work" but rather signatures of trusted parties, one party one vote. If 100 banks get an inter-bank ledger, 98 of 100 agree on the block chain all the alarms should go off in the last two banks. With signing and countersigning it's pretty hard to go back on anything as 100 banks have digitially signed that they saw your bank digitally sign that this block chain is correct. Because it's harder than you think to find one trusted master to rule them all, both domestically and internationally. Everybody wants to do their own verification which is exactly what block chains provides.

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[The Conductor]

I wouldn't use the "proof of work" but rather signatures of trusted parties,

Is there a term-of-art for this blockchain-verified-by-syndicate? With it, just about any group can become their own bankers (not totally trustless like Bitcoin, but just a small amount that is easy to maintain small group), I have been wondering how long it will be before a drug cartel issues a cryptocurrency, backed by drugs instead of gold, and verified by signature servers on a darknet. It would probably be more functional

Re:What exactly are they doing with it?

[TeknoHog]

It's a distributed trust network, right? Why would banks that survive on trust want that distributed?

Apparently, they don't. Each institution is building its own, private blockchain to stay buzzword compliant, not because it makes any technical sense.

It's like hearing about the Internet for the first time, and proceeding to build a private, closed version -- which really happened several times, but eventually people realized that the whole point about the Internet is not being private or closed.

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[known_coward_69]

finance has a lot of third parties who clear payments. this costs the banks a lot of money and blockchain is a way to guarantee payments without a third party. There is a TED talk about it if you're curious

Expediency of transactions?

[killfixx]

Will this speed up transfers and other digital transactions?

I find it incredibly frustrating that it still takes DAYS to do some electronic transfers. After all, immediately verifiable trust should foster a speedier transaction, right...right?

Unfortunately, I doubt it...

Re:Expediency of transactions?

[Hans Lehmann]

Electronic transfers of course only take milliseconds, but what's the point of banks using them if they can't steal your money for a few days and earn some interest on it before finally handing it over to the party that you originally intended to have it. Block chains will be no different. Banks will still take the attitude of "Fuck you, pay me".

Reaction to fiat money?

[NotQuiteReal]

Maybe they want to be relevant dealing with a Curran more real than government issued money?

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[Anonymous Coward]

This is nothing to do with bitcoin or any other pretend e-currency, it's a distributed ledger system for tracking transactions between banks I believe.

It's supposed to replace the current EFT systems between banks, which are the electronic equivalent of a pile of rubber-banded cheques stuffed in a postpack.

Mr Robot

[Comen]

They been watching Mr Robot!

But what about 2FA?

[NormalVisual]

It's nice they're putting so much effort into blockchain schemes, but they still don't seem motivated to make an industry-wide effort to secure their online account access via 2FA for their customers.

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[sabbede]

My credit union does MFA, are banks slacking? Though that's hardly the most out-of-date part of their industry. Hopefully the absence of MFA isn't something that generates revenue for them, or like their other antiquated processes it will never change. Like how when you think you're making an electronic transfer but they're mailing a check because an actual electronic transfer means paying extra for a wire transfer like it was 1896.

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[NormalVisual]

My credit union does MFA, are banks slacking?

Sadly, a lot of them still are, even though technically it's a very easy feature to add.

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[sabbede]

I think a man named Mojo can express my feelings on the matter better than I.

https://youtu.be/bMehSfTmnbY [youtu.be]

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[NormalVisual]

And the thing is, they don't even need to spend $5/token - just implementing some kind of simple TOTP scheme using Google Authenticator or other generator would help immensely.

Doing anything means faster than expected adoption

[sabbede]

Banks are slow. They're still stuck on systems and processes built around the limitations of 30-40 year old tech. Maybe blockchains will allow them to move away from the now unnecessary ACH middleman, and end the way they have abused it to maximize fees.

The key

[ThatsNotPudding]

The key was banks figuring out how to prop-up the chains in the shape of a pyramid, with the FDIC suck^H^H^H^H insured small accounts at the bottom.

Ripple

[tuttle]

IBM is playing catch-up with Ripple: https://ripple.com/ [ripple.com] . Their distributed ledger has been available for a while now, and a number of banks already use it. They have some pretty charts over here: https://charts.ripple.com/#/ [ripple.com] , but I don't think they have much to do with the Banking technology side.

They could be better off

[lurker10]

and moving much faster if they used a 3 years in production blockchain technology of NXT with 100+ APIs. https://nxtwiki.org/wiki/The_N... [nxtwiki.org]