Blockchain based banking - anyone involved?
Discussion
An ex-colleague of mine works for a firm that develops and promotes the use of blockchain tech intended to replace existing company and fund share / unit registers.
I understand they are running trials with a number of registrars but my feeling is that it's unlikely to get adopted unless a regulator forces them to transition because the risk, cost and disruption from migrating to a new database would be massive.
I'm not aware of any compelling reason for established banks / custodians / registrars to want to move to blockchain.
I understand they are running trials with a number of registrars but my feeling is that it's unlikely to get adopted unless a regulator forces them to transition because the risk, cost and disruption from migrating to a new database would be massive.
I'm not aware of any compelling reason for established banks / custodians / registrars to want to move to blockchain.
Interesting, thanks - I can think of one application which would be conveyancing - if all parties are irrevocably verified it should eliminate diversion fraud in that sector.
Also, it should be possible to make a stock/share short-proof, which in itself could be a key factor in economic growth for the entire economy.
Also, it should be possible to make a stock/share short-proof, which in itself could be a key factor in economic growth for the entire economy.
ReverendCounter said:
Interesting, thanks - I can think of one application which would be conveyancing - if all parties are irrevocably verified it should eliminate diversion fraud in that sector.
Also, it should be possible to make a stock/share short-proof, which in itself could be a key factor in economic growth for the entire economy.
I'd be surprised if the move to blockchain would eliminate fraud from the conveyancing process. The move to a new technology (for contracts, land registry and banking all linked?) would undoubtedly create confusion and technical impediments for many and new fraud opportunities for those so inclined. Also, it should be possible to make a stock/share short-proof, which in itself could be a key factor in economic growth for the entire economy.
As for short selling, governments can and occasionally do create legislation to ban it but they rarely do so. I'm not sure how banning it could stimulate growth. Short selling is facilitated by temporary transfer (lending) of the title of the shares to the short seller and it can also be effected via derivatives and gambling sites. I don't see how the database technology is relevant to a ban.
Edited by LeoSayer on Friday 14th October 14:29
ReverendCounter said:
Interesting, thanks - I can think of one application which would be conveyancing - if all parties are irrevocably verified it should eliminate diversion fraud in that sector.
Also, it should be possible to make a stock/share short-proof, which in itself could be a key factor in economic growth for the entire economy.
They’re possibly the two least likely use cases in the near term. Also, it should be possible to make a stock/share short-proof, which in itself could be a key factor in economic growth for the entire economy.
The first because of HMG involvement in the form of the land registry, the latter due to the systemic issues associated with bringing enough market participants along for the ride and being able to handle sufficiently high TPS.
There are some specific asset niches where real opportunities exist but I’m not aware of anyone in those sectors who seems to be thinking correctly about their development or go-to-market strategies at present (the challenge here isn’t finding the niche, or even developing the tech, it’s around market participation and achieving critical mass).
Would they disrupt finance? Not to the extent that the typical punter would notice, but they could be very lucrative for those involved.
otolith said:
There was a tendency to try to shoehorn blockchain into any sort of fintech project whether it was appropriate or not - I think for a while it looked good to investors. Haven't seen so much noise lately.
Nail on the head. My girlfriend works for a FTSE 100 publishing company and their CEO is now talking about NFTs. No idea how NFTs fit into books, but clearly he thinks just talking about the latest buzzword is what he needs to do.I am sure when blockchain first became big, lots of big companies employed a couple of blockchain consultants and stuck them in their office because they wanted to be seen embracing new technology. I am sure the consultants got paid a fortune for not actually coming up with anything worthwhile at all.
No bank is going to ever embrace blockchain, there is no chance they are going to list their transactions in a public ledger.
I guess also when you consider how inert existing major banks can be with the tech that underpins the real bread and butter stuff (e.g. payments infrastructure still uses mainframes quite heavily I believe!) it's hard to imagine them being desperate to rip everything out to such an extent. Would anyone want to stick their neck out given the use cases aren't rocket science, the existing solutions work at scale, and the consequences of failure (e.g. TSB and RBS in recent years) are pretty enormous?
LeoSayer said:
As for short selling, governments can and occasionally do create legislation to ban it but they rarely do so.
Yep, shorting continues to the detriment of the investors, the business being shorted, the shareholders, the employees and the customer base, if the business is bankrupted so customer choice is taken away.If the platform on which the share or stock is launched which prevents shorting - like a blockchain based share trading platform, they can't be duplicated in their thousands/millions, can't be sent through dark/lit pools and price manipulation can't take place.
Instead of the stock price being destroyed in order for shorts to profit, the stock price grows naturally, the business flourishes, more jobs are generated, more turnover, more business expansion, more revenue generated for the economy.
Joey Deacon said:
No bank is going to ever embrace blockchain
But you're coming from the perspective of converting a bank into a blockchain-based entity. If a neobank originates from the blockchain from the outset, it can offer things to customers who are, amongst other things, pissed off with the current banking status quo.As for the additional benefits, let's see.
digger_R said:
I did some consulting around 7 years ago for a UK high street bank in Canary Wharf, thousands of people working on those projects at the time.
Would you expect the outcomes of the projects to be patented? Or does the fintec industry tend not to protect their products like that?ReverendCounter said:
But you're coming from the perspective of converting a bank into a blockchain-based entity. If a neobank originates from the blockchain from the outset, it can offer things to customers who are, amongst other things, pissed off with the current banking status quo.
You can’t do “a blockchain neonank” and have it offer an appropriate product suite/interact with the broader financial ecosystem without [i]still[/i[ using conventional techniques and infrastructure. Blockchain is not some magical panacea.ReverendCounter said:
Would you expect the outcomes of the projects to be patented? Or does the fintec industry tend not to protect their products like that?
Can’t patent business processes in the UK. You protect your IP in that space is by compartmentalising knowledge and through intelligent use of systems. Done right, you, can prevent a competitor from replicating what you do even if they think they know what you do and/or hire what they think are key staff. ReverendCounter said:
Yep, shorting continues to the detriment of the investors, the business being shorted, the shareholders, the employees and the customer base, if the business is bankrupted so customer choice is taken away.
If the platform on which the share or stock is launched which prevents shorting - like a blockchain based share trading platform, they can't be duplicated in their thousands/millions, can't be sent through dark/lit pools and price manipulation can't take place.
Instead of the stock price being destroyed in order for shorts to profit, the stock price grows naturally, the business flourishes, more jobs are generated, more turnover, more business expansion, more revenue generated for the economy.
There is no duplication. Short selling is facilitated by shareholders lending their stock. In other words, short sellers have (temporary) legal title to the stock they are selling.If the platform on which the share or stock is launched which prevents shorting - like a blockchain based share trading platform, they can't be duplicated in their thousands/millions, can't be sent through dark/lit pools and price manipulation can't take place.
Instead of the stock price being destroyed in order for shorts to profit, the stock price grows naturally, the business flourishes, more jobs are generated, more turnover, more business expansion, more revenue generated for the economy.
No platform, regardless of the technology they use, will prevent shorting when it's legal to do and there is demand.
LeoSayer said:
There is no duplication..
Well, no, you're right - but the end result is the same.LeoSayer said:
No platform, regardless of the technology they use, will prevent shorting when it's legal to do and there is demand.
Steps are being taken by one entity to prevent shorting by issuing a type of share recall* (not actually a recall in the correct sense/definition) so the stock can be launched on another platform, in order to take it out of the hands of brokers/shorts/marketmakers - to stop shorting.It can be done - or rather, it will be possible.
- share surrender
Edited by ReverendCounter on Friday 14th October 22:53
LeoSayer said:
There is no duplication. Short selling is facilitated by shareholders lending their stock. In other words, short sellers have (temporary) legal title to the stock they are selling.
No platform, regardless of the technology they use, will prevent shorting when it's legal to do and there is demand.
Don't bother with this argument, or before you do, read back over the Reverend's previous posts. No platform, regardless of the technology they use, will prevent shorting when it's legal to do and there is demand.
He believes in some weird financial conspiracy theory stuff, and honestly, it's not worth your time....
Condi said:
Don't bother with this argument, or before you do, read back over the Reverend's previous posts.
He believes in some weird financial conspiracy theory stuff, and honestly, it's not worth your time....
First of all, it isn't an argument, second - you don't believe market manipulation takes place.He believes in some weird financial conspiracy theory stuff, and honestly, it's not worth your time....
Thanks for your input but you do everything you can to derail the crypto thread, so maybe pop back in there and do your usual, cheers.
Actually you know what condi, how about you educate me on blockchain banking, because that's the purpose of the thread. What can you tell me?
I work for a FS consultancy and it was all the rage about four years ago. Everybody apparently needed a blockchain...then most firms figured out that actually, they just needed an SQL database. I've got a few ex-colleagues who've gone to work for firms like R3 who do some genuinely interesting work. But most the time, it's the answer to a question that nobody asked.
The new big thing is 'banking in the metaverse'. Which is such an absolute crock of horse-s
t that I don't know where to start.
The new big thing is 'banking in the metaverse'. Which is such an absolute crock of horse-s
t that I don't know where to start.Gassing Station | Finance | Top of Page | What's New | My Stuff