Big Banks Are All Over Blockchain _ Wolf Street what is bitcoin mining

To process derivatives, currency trades, transactions, etc. Just don’t call it cryptocurrency. It’s a “digital currency.” by don quijones, spain, UK, mexico, editor at WOLF STREET.

As a general rule, most bankers disparage cryptocurrencies, like bitcoin, as anything but purely speculative instruments. But they don’t disparage blockchain, the technology that underpins cryptocurrencies. On the contrary. They’re pouring money into developing their own “digital currencies,” as they call them. Just don’t call them “cryptocurrencies.”

UBS, BNY mellon, deutsche bank, santander, the market operator ICAP, and the startup clearmatics formed an alliance in 2016 to explore the use of digital currency between financial institutions and central banks, using blockchain.

The ultimate goal of the project is to create a digital currency known as utility settlement coin (USC), which will facilitate payment and settlement for institutional financial markets.What is bitcoin mining as the FT reported in october, commercial banks are growing tired of waiting for central bankers to take the lead in fending off the challenge that standalone cryptocurrencies such as bitcoin could pose to their control of monetary policy, and are pressing on with their own pet projects.

According to deutsche bank’s website, USC is “an asset-backed digital cash instrument implemented on distributed ledger technology for use within global institutional financial markets.” it consists of a “series of cash assets, with a version for each of the major currencies (USD, EUR, GBP, CHF, etc.) and is convertible at parity with a bank deposit in the corresponding currency.”

It’s easy to see the attraction blockchain holds for big banks like deutsche, UBS and santander: combining shared databases and cryptography, the technology offers multiple parties simultaneous access to a constantly updated digital ledger that cannot be altered.What is bitcoin mining with it, banks could offer a safer, faster, cheaper, more transparent service to their customers, while doing away with the need for a central operator.

Settlements could be executed almost instantaneously on a bank-by-bank basis rather than having to be netted at the end of each working day by the respective central bank. The subsequent cost savings could be huge.

“recent discussion of digital currencies by central banks and regulators has confirmed their potential significance. The USC is an essential step towards a future financial market on distributed ledger technologies,” commented julio faura, head of RD at santander.

Like santander, spain’s second biggest bank, BBVA, has been pouring funds of its own into blockchain technology. In april, it announced that it had conducted its first ever international money transfer pilot based on san francisco-based ripple, a “gross” settlement system in which the payment orders are processed and settled one by one (without compensation) and in real time (continuously).What is bitcoin mining the bank said it had managed to execute payments between spain and mexico in a matter of seconds compared to the standard four-day period.

There are also big opportunities in clearing and settlement. At the beginning of this year, the depository trust and clearing corporation (DTCC), the world’s largest financial services corporation dealing in post trade transactions, announced that it intended to shift post-trade clearing of single-name credit default swaps on to a blockchain system by the end of next year. It picked IBM to head up the project. If the project is a success, the plan is to do the same with other derivatives processed by the giant US clearing house.

But perhaps the biggest area of interest for commercial banks is in the field of customer and counterparty identification and verification.What is bitcoin mining banks, largely at the behest of government, have been trying for years to set up a shared digital utility to record customers’ identities and keep them updated, but with limited success. Now, the blockchain could offer a solution because of its cryptographic protection and its ability to share a constantly updated record with many parties.

“we think identity could be big,” says mr whitehouse at accenture, which recently worked with the UN and microsoft on a blockchain identity system for people with no identity papers.

In singapore a consortium comprising a local government body and a number of major banks, including HSBC, mitsubishi UFJ financial group (MUFG) and OCBC bank, has just completed the ASEAN region’s first-ever proof-of-concept for a “know your customer” (KYC) blockchain. Using distributed ledger technology, the KYC blockchain enables information to be recorded, accessed and shared across a distributed network among participating banks.What is bitcoin mining

In essence, banks will be able to register, validate and share customer information – presumably with the customer’s consent – in an efficient, secure and instantaneous manner. In other words, in the mother of all ironies, a technology that has so far been geared at guaranteeing anonymity in transactions, or at least has been marketed on that basis, could soon be used by banks to keep much closer track of, and share data on identities, money flows, transactions, and spending habits. By don quijones.

“with friends like these…” read… the inconvenient limits to european unity integration

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Robert, what you say is true about gold, unless, of course, it’s paper gold that is only a bet on the price of physical gold.What is bitcoin mining and, of course, assuming it actually exists in the vault of the place that’s supposed to be warehousing it. And, of course, if it wasn’t used as collateral for a loan by the warehouser.

On the other hand, I think gold lovers are just plain nuts crazy jealous over how bitcoin is rising in value just like gold is supposed to, and gold is dead as a doornail in pricing.

Anyway, if gold were jumping around in price, how many gold people would ignore the fact it embodies the same qualities of fiat as bitcoin and actual fiat? Gold would be just like bitcoin if it were backing currency as ‘sound money’. A very flexible denominator. No different than plain fiat alone, except gold adds management overhead to calculate the daily spot denominator for gold to fiat exchanges.

Of course, gold advocates would say “no, gold is different because it’s true money and bitcoin is computer tulips.” the bitcoin lesson would just bounce off them.What is bitcoin mining

Like robert, I’m skeptical. The existing bitcoin database has to be minuscule compared to the sizes of the bank databases. And they are complaining now about the time and electrical power required to process a transaction. What will the cost and processing latency be for these enormous data bases with billions of transactions per hour? And as for security, every week we read about another crypto exchange that’s been robbed. Not to mention the financial institutions that are regularly hacked (including the fed).

While it not be worth decrypting individual communications to get credit card numbers one by one, it’s probably worthwhile in order to rob a bank.

And it isn’t clear if the banks are going to use a few supercomputers under their control to do the processing or are the going to use the bitcoin paradigm of “mining”.What is bitcoin mining robert has listed just some of the problems with mining.

So it seems people have thought about as far ahead on blockchain as they have on crypto currencies. Maybe we should start out by trying out blockchains on something low impact like car tags or dog licenses and see how it goes.

It seems

‘decentralized’ blockchain is really just a centralized bookkeeping system, but it’s not anywhere, it’s everywhere and nowhere. Every transaction would have to take place in it, with no door to knock on and nobody to call if something goes wrong. Like today’s coin exchanges that people have sent hundreds of billions of dollars to, there is not even an address. (fun exercise: find the address of any coin exchange.)

You could go to your bank, but what could they do to correct a failure of the system? Zero points if you think they’d give you your money back.What is bitcoin mining

Anyway, the UTC proposal just plugs into the ‘one world currency’ fallacy, the recurring dream of centralists and NWO fantasists. Would even brussels be usurped, or would it be based in brussels? It’s not reasonable to expect that the system would remain unregulated for long.

But what to regulate? An organic ‘decentralized’ system?

Proposal: originating currency -> UTC -> local currency.

Why not originating currency -> local currency?

Because ultimate objective is: originator UTC -> recipient UTC.

Lotsa luck with that. Like a giant euro, with every nation pretending to be fiscally responsible, after they’ve all been convinced to give up their monetary sovereignty (/sarc).


Meanwhile, in other news, the coin market is collapsing, with bitcoin and bitcoin cash both down over 30% , or 130 billion dollars market cap in the last 4 days for just these two.What is bitcoin mining the overall coin cap of the almost 1400 coins and (anyway worthless) tokens is down over 100 billion.

It could very well bounce back 50% in the next two days for all we know, but the coin market will never be the model for stability in pricing transactions.