Several thousands of computers around the world try to solve a puzzle. The winner gets a fee. The winner also gets to make the next update to the common, replicated ledger. UBS, Barclays, and Citibank are now saying that they like this setup. They want to do the same. They even say that they want to capitalize on bitcoin’s “blockchain technology”.
But what exactly is there to capitalize?
Will they buy a collection of thousands of computers and let these machines play a game, so that the winner will be allowed to update the ledger? Will it be the same game as in bitcoin? What will be in the ledger?
The reason why bitcoin does it that way, is because it wants to prevent anybody from taking control over the ledger. That means the following things:
- Anybody in the world can pick a random number, multiply it by the given base point and hash the result. That will be his next bitcoin address. Nobody can prevent anybody from using his address. So, there is no KYC (Know Your Customer) or AML (Anti-money Laundering) that can prevent anybody from opening accounts. There shall also be no designated individuals nor companies banned from opening accounts, and there shall be no named countries banned from trading with anybody else. It is simply the end of the monkey business in which we would exclude individuals, just because they happen to live in a country like Iran. The banks have always participated in that monkey business while bitcoin puts an end to that madness.
- Anybody in the world can use his random number to digitally sign over money to anybody else. It is no longer possible to prevent person A from paying person B. Bitcoin puts an end to that monkey business too.
- You can be the president of the United States, but if you do not know the random number that controls a particular amount of bitcoins, you cannot freeze, confiscate or otherwise get hold of these bitcoins. That is another monkey business that goes out of the window.
The blockchain is just a technological solution conceived to achieve these three goals. What are the banks going to achieve with their own blockchain? Will the banks put a stop to their bullshit when users open an account? Will the banks stop holding back payments because they do not like the recipient? Will the banks prevent confiscations of the money in their users accounts? No. The banks will not. The banks are too deeply vested in their habit of routinely doing these things. We cannot trust them with our money and that is exactly why bitcoin was invented.
So, what exactly are UBS, Barclays, and Citibank putting on the table? What are they offering? Bitcoin was invented to get rid of them. Which forms of misbehaviour are they prepared to abandon in order to lure back their customers? Do they really believe that doing some kind of “blockchain technology” nonsense will spare them from the inevitable?
All the money in the world will not help, if you no longer control the money.