Rather than pretending resources spent on data systems in information exclusive industries (like banking) can lead to longstanding productivity gains which don’t just buy us a little time until the next paperwork crisis in five years time, perhaps we should invest that money in the expansion of industrial capacity?
Fed up of blockchain hype? Or, convinced that a shared database will revolutionise the world as we know it? Or, don’t know one way or the other? The FT’s called a debate in which both sides of the argument will be properly defended. It’s in Markets Live form. It’s at 1pm UK time today. It features Izzy vs Simon Taylor, co-founder and blockchain director of 11FS.
In today’s daily blockchain bulletin we bring you news that next big thing in financial back-office technology isn’t actually the blockchain. Apparently it’s something called a “distributed concurrence ledger”. We’re not yet convinced that’s a thing, but the white paper outlining the DisLedger DCL concept does at least provide a refreshingly honest account of the core problems with blockchains.
Another day, another blockchain distributed ledger technology (DLT) report*. Today’s comes from the World Federation of Exchanges, which provides us with a survey of what financial market infrastructure types are thinking about DLT. And, interestingly enough, the bulk of the survey is dedicated to unknown, unknowns. Since DLT hype is exclusive to all other media outlets on the internet, we won’t feel bad about highlighting some of the real concerns being raised by market practitioners in the space with respect to DLT rollout.
Four banks have stolen loads of column inches on Wednesday with news that they are developing “a new form of digital cash that they believe will become an industry standard to clear and settle financial trades over blockchain, the technology underpinning bitcoin”. In the fanfare, however, lots of common sense has been abandoned. The big idea here (allegedly) is that banks will use a “utility settlement coin” to bypass the need for costly and inefficient fiat liquidity from the cbank. The utility settlement coin, based on a solution developed by Clearmatics Technologies, aims to let financial institutions pay for securities, such as bonds and equities, without waiting for traditional money transfers to be completed. Instead they would use digital coins that are directly convertible into cash at central banks, cutting the time and cost of post-trade settlement and clearing.
Financial hype cycles are predictable mostly because they mimic fashion fads and music fads. For example, there was a time in this reporter’s life when she aspired to be cutting edge and cool. Joyfully, no longer. This involved dying her hair pink (as much as she could get away with without being expelled), reading NME and Melody Maker, and listening to the most obscure bands available in the acceptable genre, which was Indy rock. If and when the bands went “mainstream”, however — something assessed by whether the year below was listening to them — it was time to move on and find something more obscure. “Are you seriously listening to Blur? What seriously? Jeez. I much prefer Radiohead. What!? You’ve never heard of Radiohead? I can’t believe it. I’ve been a fan for like ‘forever’. You’re not cool.“
The Hong-Kong based Bitfinex exchange is short 119,756 bitcoins after being hacked on Tuesday, though nobody can be sure what’s really happened because ‘hacking’ is a loose term and can encapsulate almost anything, including an internal security breach. (Do see the case of Mt Gox.) The mark-to-market value of the stolen coins is roughly $70m, but again who can really tell their true worth. Bitcoin is an asset class where the liquidation of 119,756 (approximately 0.8 per cent of the total bitcoin circulation) can move the market more than 20 per cent, suggesting a certain fantastical element to the valuation.
In our inbox just now from Stephan Tual, Founder & COO, of Slock.it, somehow related to the DAO and Ethereum by way of an unquantifiable number of revolving doors between respective blockchain projects/cabals: Ethereum fork successful, all DAO token holders to be made whole The title says it all – end of the hack that never was.On Ethereum, Code is Law. It’s the network’s participants that determine its evolving rules, voting by way of updating their software. Today, they’ve done just that to nullify an exploit found in the DAO, proving their capability to self-govern effectively.https://blog.slock.it/what-an-accomplishment-3e7ddea8b91d#.kznb3sjbxHappy to chat at anytime on stephan.tual over skype.Cheers!
Andrew O’Hagan’s 35,000 word write up of the Craig Wright Satoshi affair in the London Review of Books has been out and circulating since the weekend. The market has had time to digest the information and yet it doesn’t look all that much like anyone has found much closure from the account. For now at least, more questions than answers persist. Some interesting snippets nevertheless included:
Whilst by no means an entirely undisputed theory, ancient historians generally believe the emergence of civilised states such as Sumer was closely connected to the role temples played in standardising, clearing and redistributing value in society. Temple authorities, the theory states, kept account of the assets and liabilities of each individual in a centralised manner, meaning citizens could claim as many goods from the temple store as the temple records permitted. This was often based on the amount of provable work they had done. Tangible coins were thus unnecessary. The accounting system was ubiquitous in society and trusted. As Benjamin Foster, a Yale Assyriologist, has noted historians have speculated that the religious complex was essential for spurring the sort of non-rivalrous collaboration that allowed for the cultivation and settlement of land in the first place.
You may have come across this story about Barclays partnering up with a “Goldman-backed” bitcoin payments app called Circle International Financial, which uses bitcoin to transfer central bank currencies as digital money increasingly moves into mainstream finance, and thought “wow” that sounds innovative and exciting. But is it? Is it really all that innovative? Let’s break down some of the key claims being made.