Wall Street Built on Blockchain
Please consider As Crypto Slumps, Goldman Sachs Aims for a Wall Street Built on Blockchain
Wall Street’s biggest banks have largely avoided investing directly in cryptocurrencies. But many are quietly working to integrate blockchain, the technology behind crypto, into trading and other businesses.
Goldman Sachs is already trading some bonds and other debt securities for clients on blockchain-based networks such as Ethereum, and the bank is building its own blockchain-based trading platform. JPMorgan Chase already has a platform in place, called Onyx.
Outside of banking, Walmart Inc. has used blockchain for tracking its supply chains. In real estate, some title companies have used it for recording homeownership.
“Blockchain technology is going to rewire all financial services,” said Tom Farley, the former president of the New York Stock Exchange.
That said, Wall Street firms have been experimenting with blockchain projects for at least the past five years. Despite much hype, few have had a widespread impact on how financial transactions take place.
Others have thrown in the towel. A group of European insurance companies formed a consortium called B3i in 2016 to explore blockchain uses in their industry. In July, the consortium shut down after failing to raise new capital.
Blockchain Will Come
Bitcoin cannot be separated from blockchain, but it is already proven that blockchain neither needs nor requires Bitcoin.
Importantly, Bitcoin is a public, distributed network that requires mining and massive amounts of electricity (proof of work) to function. In contrast, the blockchain systems used by Goldman and Walmart require a permissioned authority.
The alleged advantage of Bitcoin’s permissionless, distributed network melts under increasing energy costs to run it, massive ledgers, and conversion costs from Bitcoin to dollars, euros, etc., to function as money.
Permissioned blockchain will eventually be a big winner. And it will be a winner without Bitcoin. Bitcoin is too unstable, too costly for transactional use, and too dependent on energy.
Fun Facts
Banks dont either. The payment rails are open 24/7/365. That is how your crypto stays open.
— Stimpyz (@Stimpyz1) August 21, 2022
Spare me the sap of being able to send Bitcoin anywhere instantly cheaply. One still has to convert Bitcoin to dollars, euros, yen or whatever to spend it.
Coming soon, central bank digital currencies will truly be 24×7 and costless, albeit with well known flaws including risk of confiscation.
That’s an aside. The blockchain technology will succeed, standalone.
Finally, it is beyond idiotic to believe governments will embrace Bitcoin en masse or that it will succeed as money if they don’t.
Bitcoin has been amazingly successful as a medium for speculation. But unlike blockchain, Bitcoin will never advance beyond that.
Ironically, the more Bitcoin succeeds as a tool for speculation, the less use it has as money, its original stated purpose.
Why Use Blockchain?
A permissioned blockchain is useful for clearing transactions between different entities using consensus and where no single entity owns the database.
For most banking applications having an open ledger and a coin are negatives.
Permissioned is ideal for wholesale CBDC.— Economic Defense Fund – Macro Long/Short Equities (@EconomicDefense) August 22, 2022
Perceived Value of Bitcoin
Much of the perceived value of Bitcoin is no more that speculative hype. The word “bezzle” is a good description.
Bezzle is a temporary gap between perceived wealth and long term-economic value.
For discussion, please see The Stock Market, Bitcoin, and Housing Fake Wealth Bezzle Will Be Wiped Out.
This post originated at MishTalk.Com
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Mish
I start with packets because I know what they are, and am familiar with how they are moved within telecom networks, i.e. SONET/SDH, ATM, MPLS, Ethernet, the OSI layers, and so on. I’m not the first person who, on being confronted with the unfamiliar, starts by drawing a comparison with what he knows.
Now, as I understand it, the Internet isn’t a separate network, but rather is defined by how information is coded: not in PCM but in TCP/IP, and that information isn’t sent via a dedicated circuit but rather unrelated packets travel together in physical layer, each with their own address, enabling them to take separate paths. This attracted the war spooks, who wanted messages to get through the network even if parts were destroyed by nuclear war.
Thus, after the bombs go off, Washington might no longer be able to contact North Dakota by means of a dedicated session, but rather the information is encoded in TCP/IP and the packets can get there through whatever route is available. The switches will need to be able to handle TCP/IP (hello, Cisco switchrouters), but as long as they do and as long as the entire backbone and the feeders in metro D.C. and wherever they’re located in North Daokta aren’t destroyed, the two ends can communicate.
That’s my frame of reference. As I’ve been reading that link, my first task is to eliminate the Wired-style promotionalism, and start without Bitcoin until I understand how the messaging works. In packet-switching, the data can be effectively encrypted, and does not have to go through an intermediary. Thus, I’m struggling with the claim that blockchains are more secure.
Here’s a thought: How about discussing blockchains within the 7-layer model?
What is “permissioned authority?”
Also: Mish, a bunch of what you posted is not visible to me. Nothing under “fun facts” or “why use blockchain.”
I suppose it did, but with no disrespect to Mish, I always have lots of windows open. Not real inclined to ditch all of that every time I want to read one of his posts.
Tulips still have value! Not much, but some.
In 400 years BTC people will wonder at the BTC madness and it will be the subject of economic textbooks, replacing Tulipmania as the ultimate foolishness.
There is a definite superiority to gold vs. cowrie shells. There is a reason one died out and another survived.
Short of nuclear fusion, one cannot make more gold at will. Salt can be made on a whim, cowrie shells can be farmed (and are highly perishable due to breakage). Furthermore one cannot move 1000 years worth of collective wages of one person in a box the size of a backpack if it was cowrie shells.
I’m not a huge gold bug but I can see the clear difference between gold and other forms of currency that have passed away. Yes, there are temporary blips where other things become more wanted as a currency (bullets during a war, water\food during a siege) but these would never survive as a world store of value and have limited usefulness due to very unique, and local circumstances.
And gold was widely used beyond Europe. In fact, it was used pretty much everywhere there were people, including the Americas pre-Columbus, wherever it was found.
There’s enough gold in the core of the earth to cover the entire surface of the earth 12 feet deep. Accessibility matters.