A "win win" way to look at the world of shared ledgers, introducing radical transparency as a comparative advantage, making a #regtech play for Jersey.
Call Girls In Holiday Inn Express Gurugram➥99902@11544 ( Best price)100% Genu...
A Blockchain Narrative for Digital Jersey
1. www.chyp.comPlease Copy and Distribute1
A Blockchain Narrative for
Digital Jersey
Ambient accountability as a
comparitive advantage
FinTech Jersey 2015
2. www.chyp.comPlease Copy and Distribute
David G.W. Birch
Director of Innovation at Consult Hyperion
An internationally-recognised thought leader in
digital identity and digital money;
Named one of the global top 15 favourite sources of
business information (Wired magazine);
In the London FinTech top 10 most influential
commentators (City A.M.);
One of the top ten Twitter accounts followed by
innovators, along with Bill Gates and Richard
Branson (PR Daily);
One of the top ten most influential voices in banking
(Financial Brand);
Named one of the “Fintech Titans” (NextBank);
Ranked Europe’s most influential commentator on
emerging payments (Total Payments magazine).
2
4. www.chyp.comPlease Copy and Distribute
Blockchains and Blockheads
‘It’s all about the blockchain… no, wait private chains… I mean shared ledgers…”
4
13. www.chyp.comPlease Copy and Distribute
Why? Innovative
p.225 Smart contracts need not be limited to finance and when paired with "smart property" — where deeds, titles and other certifications of
ownership are put in digital form to be acted on by software — these contracts allow the automatic transfer for ownership of a physical asset.
13
15. www.chyp.comPlease Copy and Distribute
Contact
15
Browse www.chyp.com
Follow @chyppings
Mail info@chyp.com
Comment http://www.chyp.com/media/blog/
Listen http://www.chyp.com/media/podcasts/
Consult Hyperion UK
Tweed House, 12 The Mount
Guildford, Surrey GU24HN, UK.
+44 1483 301793
Consult Hyperion USA
535 Madison Avenue, 19th Floor
New York, NY 10022, USA.
+1 888 835 6124
Editor's Notes
Technology’s Martyrs: The Slide Rule” by Kirk Johnson in the New York Times (3rd January 1987) covers the story of Keuffel & Esser.
This company, founded in 1867, was America’s pre-eminent manufacturer of slide rules. In 1965, they sold one million of them. In 1967, their centenary, they were commissioned to prepare a report about the future called “Life in the year 2067″, looking a century on. They interviewed scientists to come up with a vision that predicted electric cars and 3D TV. What it didn’t predict was that they would be out of business within a few years because of the electronic calculator. The end came quickly. On this day in 1976
K&E produced its last slide rule, which it presented to the Smithsonian Institution.
[From Computer History Museum | Exhibits | This Day in History: July 11]
In less than a decade they were gone because of technological change. But note the “Gibson” take on this: the invention that destroyed them, the electronic calculator, already existed when they wrote their report. In fact the first all electronic calculator desktop calculator went on sale in 1961
At the end of 1961 the Bell Punch Company put the Anita Mk VII on the market in continental Europe and the Anita Mk 8 in the rest of the world as the world’s first electronic desktop calculators. These were the only commercial electronic desktop calculators for more than 2 years
[From Anita: the world’s first electronic desktop calculator]
What’s more, the first electronic all-transistor calculator (from Sharp) went on sale in 1964. So by the time the slide rule guys did their study, the technology that would destroy them had been on open sale for several years. They made the mistake, I guess, of thinking that because slide rules cost $10 and calculators cost $1,000 they would never compete, forgetting that the inevitable curve of technology price/performance would do for them in time. And, I suspect, the scientists that wrote the report all used slide rules and were perfectly happy with them.
I don't think this is necessarily the way forward though. It seems to me that "mining" presupposes a particular blockchain architecture. That architecture has been developed, as noted, to deliver a modus vivendi unrelated to the world of financial services, where banks are supposed to trust each other and to know their customers (and their customers’ customers). Financial services do not want, or need, any such thing. This is why it is not at all surprising to see this kind of proposition emerging.
ItBit has revealed new details about its formerly top-secret Bankchain project, a private consensus-based ledger system aimed at appealing to enterprise financial institutions [...] without using bitcoin or its blockchain.
[From ItBit Reveals Bankchain Project Won't Use Bitcoin]
The chap from ItBit who is being interviewed in this article goes on to say that their architecture is “inspired by” the blockchain even it is not actually the blockchain (or, for that matter, a blockchain at all). I love this, and I expect to see more of it in the near future, because there must be a lot of people who think that a replicated, distributed shared ledger is an excellent architectural concept but they don’t want to use a cryptocurrency and nor do they want to use a proof-of-work protocol to defend against subversion by unknown actors since all of their actors are already known and trusted.
At Fintech Storm in London I was particularly interested in Gideon Greenspan’s (Coin Sciences) presentation of private blockchains, a subject dear to the heart of many of our clients and the focus gof a great deal of activity at present. The well-known venture capitalist Fred Wilson wrote about this recently, noting that financial institutions might be early adopters of private versions of blockchains for specific, industry-wide applications. As he notes, financial institutions may not be entirely comfortable with the blockchain as it is now: “One concern I hear, though, is that banks like to know who is managing their infrastructure and they are uncomfortable with miners they don’t know, located in parts of the world that make them nervous, providing the transaction processing infrastructure for these applications being built on the blockchain. To me, that is the perfect reason for banks and brokerage firms to take a bit of their data processing infrastructure and point it to the blockchain and start mining it.”
Why would they create such a pool? It would not be to profit from the mining process, a process that (as Gideon pointed out) is enormously expensive and hugely inefficient, because it was created to deliver a specific kind of robustness and censorship-resistance in order to deliver a form of digital cash substitute. But, as Gideon said, some people want to use the blockchain as a tool, not as an ideology.Which is why Fred says “If you think of the blockchain as an open source, peer to peer, massively distributed database, then it makes sense for the transaction processing infrastructure for it to evolve from individuals to large global corporations”.
I agree with this but I don't think Fred’s view is necessarily the way forward though. It seems to me that "mining" presupposes a particular blockchain architecture. That architecture has been developed, as noted, to deliver a modus vivendi unrelated to the world of financial services, where banks are supposed to trust each other and to know their customers (and their customers’ customers).
Transparency increases confidence and trust, helping markets to develop. A story from the August 1931 edition of Popular Mechanics illustrated this point. It concerns the relationship between transparency and behaviour in the specific case of depression-era extra-judicial unlicensed wealth redistribution (Glass banks will foil hold-ups 1931) and says that banks hold-ups may become things of the past if banks are constructed with glass walls, so that a clear view of everything that is happening inside the bank will be afforded from all angles at all times. (I urge you search the article, by the way, to see the lovely drawing that goes with it.)
The chap behind the idea was a New York architect called Francis Keally (1889-1978), the man responsible for (amongst other things) the Berlin Public Library and the Oregon State Capitol. He reasoned that transparency would be a fundamental defence against crime. No walls, no Bernie Madoff.
In our world of 21st century finance we no longer care about the glass bank as a physical construct, we see it as a virtual one. While toughened glass and other architectural advances might have been the key to building Keally’s glass bank, the crucial technology to build the glass institutions that will revolutionise financial services today is the shared ledger.
The idea of glass institutions may seem odd but with the advances in technology and our evolving understanding of how replicated shared ledgers might transform a variety of different kinds of systems, I think we can begin to explore their impact, which is disruptive change. I can show this by giving a couple of obvious examples: what if a company chose from a group of regulator-certified auditing applications instead of from a competing group of auditors? Auditing banks’ books would become a continual process and you might even have multiple different applications constantly auditing the same bank on behalf of regulators, shareholders, customers, pressure groups and even rival banks. Anti-money-laundering processes would shift from expensive and rather useless gatekeeping combined with floods of suspicious transaction monitoring to being a variety of different anti-money-laundering applications combing through the shared ledger entries to find transactions indicative of misbehaviour (at which point, law enforcement agencies could apply for warranted access to the unencrypted ledger entry or relevant meta data).
The first is robustness. If some or all of the participants in some marketplace each has an instance of the complete ledger, then the system as a whole might be expected to be more resistant to individual failures, errors and attacks. Think about the recent ATM and debit card system crashes that plagued one of the UK banks.
The third is transparency. As I mentioned in the discussion about the "glass bank", transparency may be the defining characteristic of the new financial order and I expect this to be a focus of our clients' attention in the near future. I advance the theory here that the next generation of financial applications will focus on transparency as the key to the new way of doing things: the robustness and the innovation are great, but it is in area of transparency that new cryptographic techniques make it possible to create a new kind of ledger. I'll write more about this in the future, but I will exploring the idea that transparency may be the lasting legacy of the financial crisis in my keynote at Next Bank Barcelona on
Transparency increases confidence and trust, helping markets to develop. A story from the August 1931 edition of Popular Mechanics illustrated this point. It concerns the relationship between transparency and behaviour in the specific case of depression-era extra-judicial unlicensed wealth redistribution (Glass banks will foil hold-ups 1931) and says that banks hold-ups may become things of the past if banks are constructed with glass walls, so that a clear view of everything that is happening inside the bank will be afforded from all angles at all times. (I urge you search the article, by the way, to see the lovely drawing that goes with it.)
The chap behind the idea was a New York architect called Francis Keally (1889-1978), the man responsible for (amongst other things) the Berlin Public Library and the Oregon State Capitol. He reasoned that transparency would be a fundamental defence against crime. No walls, no Bernie Madoff.
In our world of 21st century finance we no longer care about the glass bank as a physical construct, we see it as a virtual one. While toughened glass and other architectural advances might have been the key to building Keally’s glass bank, the crucial technology to build the glass institutions that will revolutionise financial services today is the shared ledger.
The idea of glass institutions may seem odd but with the advances in technology and our evolving understanding of how replicated shared ledgers might transform a variety of different kinds of systems, I think we can begin to explore their impact, which is disruptive change. I can show this by giving a couple of obvious examples: what if a company chose from a group of regulator-certified auditing applications instead of from a competing group of auditors? Auditing banks’ books would become a continual process and you might even have multiple different applications constantly auditing the same bank on behalf of regulators, shareholders, customers, pressure groups and even rival banks. Anti-money-laundering processes would shift from expensive and rather useless gatekeeping combined with floods of suspicious transaction monitoring to being a variety of different anti-money-laundering applications combing through the shared ledger entries to find transactions indicative of misbehaviour (at which point, law enforcement agencies could apply for warranted access to the unencrypted ledger entry or relevant meta data).