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0 pointskspacewalk26y ago0 comments

>the use of public blockchains to automate the functions of clearinghouses and escrow services will be a huge cost reduction for many industries such as finance.

But we don't want financial transactions to be fully automated and immutable. We want escrow services to be subject to laws, we want a judicial undo and modify button. So if you remove the whole "no one can change history" bit because it's an anti-feature, it is unclear why we need blockchain in the first place.

I'll redily accept that my understanding of blockchain is limited, so I'm open to being told why I'm wrong. Consider this a strong opinion weakly held.

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v646y ago

There are definitely cases where transactions need to be reversed, and this functionality can be built into a clearinghouse system. Immutability is a plus here because you have an unalterable audit log showing the original transaction and then the subsequent transaction that reverses the first. The cost savings comes from the fact that instead of having to hire independent auditors to verify the paper trail, the blockchain serves as an immutable audit log and can be verified programmatically.

990528825145696y ago

>The cost savings comes from the fact that instead of having to hire independent auditors to verify the paper trail, the blockchain serves as an immutable audit log and can be verified programmatically.

I don't know enough about the financial industry to know if a real actual problem is being solved here. I do assume that any bank in this industry is already required by law to keep a record of all transactions, and that it's all digitally processed and stored. You'd have to hire an auditor to verify the blockchain software too, and even on the ongoing basis, to audit the infrastructure to make sure it hasn't been improperly modified.

v646y ago

> I do assume that any bank in this industry is already required by law to keep a record of all transactions, and that it's all digitally processed and stored.

This is true, but it's not necessarily organized in a straightforward way, and standards can differ from organization to organization despite everyone attempting to follow GAAP. This is why entire firms exist to audit large corporations.

> You'd have to hire an auditor to verify the blockchain software too, and even on the ongoing basis, to audit the infrastructure to make sure it hasn't been improperly modified.

Not necessarily. Each transaction on the blockchain is cryptographically signed, so all you would need to audit for each transaction is that the claimed signatures verify. It's not possible, even through a bug, to forge a signature if you don't hold the private key.

vinniejames6y ago

Blockchain ledgers are nearly impossible to improperly modify. Once a transaction is made it is permanent and verified by all nodes in the system

invisiblerobot6y ago

>> You'd have to hire an auditor to verify the blockchain software too

No. You wouldn't.

vinniejames6y ago

"we" want these types of services only when the escrow and judicial systems can be trusted. That opinion changes rapidly when living under corrupt a regime

RcouF1uZ4gsC6y ago

> But we don't want financial transactions to be fully automated and immutable.

And cryptocurrency does not provide immutability anyway. Remember the DAO Ethereum fiasco where they lost a bunch of money and decided to roll it back.

vinniejames6y ago

They didn't roll anything back. That ledger, with the loss, exists today unchanged.

What did happen was a superset of users decided to create a new ledger to run in parallel, containing transactions up until but not including the loss.

The market determined the new ledger to be more valuable

v646y ago

This is a legitimate point to bring up, but seeing as how the community rejected a second fork in order to fix a bug in a smart contract that destroyed millions of dollars worth of Ether [1], I feel confident at this point saying that another similar hard fork will not occur.

[1] https://www.cnbc.com/2017/11/08/accidental-bug-may-have-froz...

hanniabu6y ago

Also it wasn't a rollback of the chain. It was the movement of the funds out of the thieves address, which was voted on by the network.

j / k navigate · click thread line to collapse

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v646y ago

990528825145696y ago

v646y ago

> I do assume that any bank in this industry is already required by law to keep a record of all transactions, and that it's all digitally processed and stored.

> You'd have to hire an auditor to verify the blockchain software too, and even on the ongoing basis, to audit the infrastructure to make sure it hasn't been improperly modified.

vinniejames6y ago

Blockchain ledgers are nearly impossible to improperly modify. Once a transaction is made it is permanent and verified by all nodes in the system

invisiblerobot6y ago

>> You'd have to hire an auditor to verify the blockchain software too

No. You wouldn't.

vinniejames6y ago

"we" want these types of services only when the escrow and judicial systems can be trusted. That opinion changes rapidly when living under corrupt a regime

RcouF1uZ4gsC6y ago

> But we don't want financial transactions to be fully automated and immutable.

And cryptocurrency does not provide immutability anyway. Remember the DAO Ethereum fiasco where they lost a bunch of money and decided to roll it back.

vinniejames6y ago

They didn't roll anything back. That ledger, with the loss, exists today unchanged.

What did happen was a superset of users decided to create a new ledger to run in parallel, containing transactions up until but not including the loss.

The market determined the new ledger to be more valuable

v646y ago

[1] https://www.cnbc.com/2017/11/08/accidental-bug-may-have-froz...

hanniabu6y ago

Also it wasn't a rollback of the chain. It was the movement of the funds out of the thieves address, which was voted on by the network.

j / k navigate · click thread line to collapse