
Four Big Banks to Create a New Digital Currency for Inter-Bank Transactions - minamisan
https://news.bitcoin.com/four-banks-create-new-digital-currency/
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andr
Sounds more like a digital currency than a blockchain currency. When this is
just between a few banks, which inherently trust each other, there's no need
to build a sophisticated P2P blockchain for a job that can be done with a
couple of SQL tables.

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pzone
Err.... no, banks definitely do not "inherently trust each other." Not when
the incentive to misrepresent your position is so high. They use very
expensive record keeping and clearinghouse arrangements (often involving quite
a lot of physical paper) that in theory could be cheaper to do with a
distributed ledger.

~~~
ChemicalWarfare
Yes, there's no 100% trust of course, but the banks, merchants and general
population trust other banks more than they would trust some random entities
or bitcoin exchanges for example.

There are of course reasons for that, the major ones being the shared (and
regulated) clearing system you're referring to (which I'm assuming this
"bitcoin alternative" is aiming to replace) and then there's the fact that
these are accredited financial institutions with reasonable controls in place
to keep them honest.

In a hypothetical scenario where credit card authorization succeeds (meaning
that the issuing bank is guaranteeing the funds to the merchant), merchant
ships the goods but the funds don't make it to their account on the merchant
bank side because the issuing bank "misrepresented the position" \- if the
issuing bank gets caught doing this they'll be in all sorts of trouble.

~~~
pzone
It's not that just about having an inherent distrust of one another. When they
do have a dispute, it is necessary to have very good documentation to bring to
court. Legally doing a mediocre job with keeping records is barely better than
not keeping records at all. So they end up spending a lot to mind their p's
and q's, even though they do have a good amount of trust.

With a blockchain it becomes cheap to add a layer of ex-post verifiable mutual
agreement between mostly-trusted parties.

~~~
ChemicalWarfare
I'm all for a blockchain (or ripple or whatever) type solution replacing
today's antiquated setup.

My point however is that I highly doubt that it's the trust issues between
financial institutions that is the primary driving force behind this
implementation.

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rahimnathwani
This article references a paywalled FT article:
[https://www.ft.com/content/1a962c16-6952-11e6-ae5b-a7cc5dd5a...](https://www.ft.com/content/1a962c16-6952-11e6-ae5b-a7cc5dd5a28c)

From that FT article: "The coins, each convertible into different currencies".

This suggests that they're using blockchain as a distributed ledger, and that
the 'coins' are just fungible IOUs for existing government-backed fiat
currencies.

So, it's a Bitcoin alternative in the sense that it can move money quickly.
But they're not creating a new currency. They're just creating new paperless
non-interest-bearing bearer bonds.

~~~
freeone3000
How does this differ from a currency?

~~~
rahimnathwani
Two things which make me see it as something other than a currency:

1) The 'coin' will not be the unit of account. The underlying currency (e.g.
US$) will be the unit of account.

2) If the underlying currency (e.g. US$) ceased to exist, the 'coin' would
have zero value.

Consider how the above two points compare with:

A) Bitcoin (which I say _is_ a currency)

B) Zero-coupon government bonds (which I say are _not_ currency)

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tjic
The more things change, the more they stay the same.

Back in 1994 I worked at startup created by a consortium of banks that was
intended to deliver tools for intra-bank settlement, B2C, etc.

[https://en.wikipedia.org/wiki/Certco_(financial_services)](https://en.wikipedia.org/wiki/Certco_\(financial_services\))

It was plagued by being ahead of its time, having technology in search of a
use case, having predatory and venal business folks (and I like most biz
folks!), a high burn rate, development split across two locations (long before
this was a solved problem), issues with corporate culture, dysfunctional
technical management that saw testing as a problem to be routed around, etc.

Hope this newest spin on the idea has better success.

(It would be hard not to - Certco was a perfect storm. That said, some great
people worked there, and after a certain point I was a dysfunctional employee
with a bad attitude myself. )

~~~
mywittyname
It's hard to envision how a new technology can change your business operations
until you see how other businesses are using it.

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Retr0spectrum
This isn't a Bitcoin alternative.

It's just a blockchain based currency.

~~~
lgas
Considering Bitcoin is a blockchain based currency, and this is a blockchain
based currency that isn't Bitcoin, it sure seems like a Bitcoin alternative to
me. Perhaps you can elaborate on why you feel otherwise.

~~~
kbody
Bitcoin's core mission is enabling people to do payments. It's
"consumer"-targeted, cash alternative.

USC looks like more of a settlement layer that could be used for more than
just moving monetary amounts around. I think it will just end up being used as
a more reliable contract agreement between banks, not that it won't be useful
to them. It's pretty obvious that they need something like that, but in no way
it's an alternative to Bitcoin.

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20yrs_no_equity
The devil is in the details. Banks have been talking about "permissioned
blockchains" for awhile, and whether this is really a bitcoin alternative, or
just using the blockchain as a jumpstart for interbank transaction software
remains to be seen. (The article is very light on details.)

If it is a bitcoin alternative then it will be distributed and tustless. Those
are some of bitcoins key innovations. Being distributed means that no central
authority can rewrite history by changing balances. Being trustless means that
the system keeps accurate records even if participants are compromised
(assuming less than %51 are compromised.)

Banks are unlikely to want to give up that level of control and probably will
make it centralized (eg: a few banks run the miners) and trusted (eg: only
authorized transactions and probably they will put in a way to rewrite
history.)

Which means, if those assumptions are true, this isn't an alternative to
bitcoin, but simply banks jumping on the blockchain hype to create a
centralized system of fast settlement.

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throwaway1974
Just don't call it "Ecoin" please, do not want to upset Evil corp

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codingmyway
Isn't this just a shared ledger to encourage more trust, with the other banks
all keeping a copy so that if UBS say they settled with Santander but there's
disagreement then they can ask the others to verify?

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eclipse31
When I read the title originally, it reminded me of when Microsoft wanted MSN
to replace the Internet, seemed like the exact same scenario.

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steveraffner
So a centralised decentralised coin ?

~~~
pzone
A distributed ledger is only "decentralized" among the users of the ledger.
We're talking about a consortium of banks making up both the developers and
the users of this ledger. There is no mismatch in how "centralized" it is.

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cloudjacker
If big banks re-released Tether, that would work decently well

The proof of concept is already there.

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dsr_
I'm reminded of the US currency situation prior to 1863, when any bank could
print its own money and you needed to figure exchange rates on every
transaction.

The status of 'unlimited legal tender' which the USD enjoys today is a major
factor in the growth of the US economy.

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zoenolan
and just to point out we (clearmatics) are hiring

[https://clearmatics.workable.com/](https://clearmatics.workable.com/)

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gjolund
Bitcoin is dead and the blockchain has been coopted.

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proyb2
Acronis is the first customer to adopt blockchain.

~~~
tobias3
They are using MD5 to hash the data:
[http://notarystorage.acronis.com/certificate/eebb9edc63a06c5...](http://notarystorage.acronis.com/certificate/eebb9edc63a06c588dbeafbbff88a0709d99afc03cd1955cddfe38b475716553)

Ouch.

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the_duke
The title is a bit misleading.

This new "USC" (utility settlement coin) is for inter-bank transactions only,
not for the general public.

It apparently is backed by a blockchain as a distributed ledger.

Details are a bit sparse across the web, but apparently it is intended as a
way for fast money transfer between and within central banks and regular
banks.

The coins act as a proxy for 'real' money issued by central banks.

~~~
jokoon
What's the point if it's not public? Wouldn't it be faster to just wire money
as it's being done currently?

~~~
sp332
Blockchains are good for preventing double-spending without a central
authority.

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simonswords82
If you can't beat them join them?

~~~
pzone
Bitcoin isn't in direct competition with the financial industry in any
meaningful way. It's basically just another currency like all the others in
the world. The financial industry doesn't suffer from servicing new
currencies. Bitcoin is more in competition to fiat money, since it is not
issued by any government and is extremely hard to control or track.

But even if it's not in competition,the ideas behind Bitcoin are very useful
for making banking more efficient and cost effective.

