The 'vampire squid' wants a bankers' blockchain Whether Bitcoin is an existential threat to the world of currency and banking probably depends on the style of tinfoil hat you wear, but the “Vampire Squid” - Rolling Stone's name for investment merchant bank Goldman Sachs - isn't taking any chances. Goldman and several of the most moneyed moguls the world has to offer the …
How could they co-opt the Bitcoin(XT) blockchain unless they do transactions in Bitcoin? - I thought that bitcoins were now reaching their limit in terms of the numbers that have been created and can be created. Surely they would need to create their own, proprietory system and map their existing assets onto it?
"Surely they would need to create their own, proprietory system" and it would have enough variation to require a spec, a closed user group with membership fees, no access for smaller companies, etc. Anyone else hear the sound of legal pencils being sharpened and wallets being emptied?
Likely, I'm guessing it'll be more an "embrace, extend, destroy" attempt or at the very least a "we're hip, we're groovy" attempt to get in on the act before moving all their activities to a "new and improved" system. Trust is the main thing, the dinosaurs could throw their massive funds into creating some truly wonderful and innovative system that makes current cryptocurrencies look archaic but trust is cold hard currency, open source's balance is firmly in the black and growing daily while the banks are deep in the red and falling fast. Whatever they come up with might become the darling of every parasitic entity on Wall Street but they'll have to force feed it to the real world at great cost while open source takes it and improves it for nothing. Sure, they certainly have the funds to keep that up for a long time, can print more if needed and maybe write it off at the taxpayers expense but can they print trust?
I believe the blockchain data is being (ab)used as a method of storing data not related to BitCoin, which is what they could (although in my opinion probably won't) do to co-op BitCoin. e.g. I could transfer 0.01 Bitcoins to you and attach data to the transfer that has no relation to BC like IOU 100USD. Then you have a public, distributed and unfakeable* record of a matter unrelated to BitCoin that piggybacks on the BC infrastructure.
*Well, probably technically fakeable, but becomes exponentially harder to fake over time.
Another "Tragedy of the commons"? Make something free and it will be abused? Bitcoin needs a Tobin tax, so that it is used only for financial transactions. 0.05% would probably suffice. But there's no mechanism for doing that, so eventually it'll bog down under the weight of non-financial transactions and trivially-small transactions. Or even get DoSsed by a hostile entity.
If Bitcoin (or something similar) is ever to replace cash, it will probably need to be organised as a large number of interconvertible pools with different fungibilities (minimum denominations) and various geographical restrictions on smaller transactions (because financial transactions will tend to cluster within a country or city). What I don't know, is whether it's possible to do this sort of partitioning while maintaining a single digital currency (exchange rate = 1.0 between all pools for all time).
Bitcoin is no-where near its limit on coins that will be created; that won't happen until 2140. And it doesn't matter anyway, because anyone who wants bitcoins can buy them from someone else, for roughly what it would cost to mine them. Miners make a profit, but if their profit gets too big other miners join in and their individual profit drops again, so it never gets too out of whack.
And yes, to co-opt Bitcoin(XT) they'd have to do their transactions in Bitcoin.
Bitcoin may be nowhere near the limit on coins, but the blockchain size is becoming an issue and there is disagreement on how to deal with that by expanding it, since it will obsolete older bitcoin clients.
It also isn't scalable at all, I've heard something like 3 transactions a second is about the limit it can handle. For a niche application like bitcoin is today that's not an issue, but those who wish it would become widespread would need to first completely re-architect the whole thing to address that. If someone piggybacked enough unrelated transactions into it, they could effectively DoS all bitcoin transactions. I'm actually surprised someone hasn't already done this.
Surely they would need to create their own, proprietory system and map their existing assets onto it?
If I am understanding correctly, they are not using the BTC blockchain, but using the BTC blockchain code, modified for their own purposes, to start their own blockchain to act as a ledger for their own transactions. Which actually makes sense, as the blockchain is just a distributed cryptographic ledger.
I read a simplified explanation of how the bankers used naked short selling to crash the world's economy. AFAIR they have issued more IOUs than there is cash on the planet and only a fraction of these have been called in.
This blockchain plan will be used to "prove" that $bank_A got their IOUs in before $bank_B. By the time it gets to $bank_ZZZ there won't be any money left!
Then we will all be in thrall to banks A,B and C who will own the planet.
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