Martin Hagelstrom is a bitcoin enthusiast, project executive and consultant working on IT projects at IBM.
In this op-ed, Hagelstrom touches on the slow but steady embrace of blockchain by the world’s banks. A few months ago I was writing a research paper centered on this question: Is there a use case for private blockchains? I’ll be honest, I started writing it with my conclusions already on mind. I was totally biased.
My thoughts were basically that private blockchains (and the lack of PoW) couldn’t offer more security than a distributed database. And at the same time they were pretty limited and based on a much more immature technology.
So, why on earth a bank or any organization would use a private blockchain instead of a well known and proven technology?
Simple answer: fad.
Nevertheless, I did my homework and research into a variety of areas: private blockchain approaches, alternative consensus mechanisms, the economics behind bitcoin security, financial industry pain points, and the inefficiencies on the actual system. I even made a SWOT analysis to compare blockchains and distributed databases.
And then something happened. You should enjoy this, as you won’t hear this often from a guy from Argentina.
I was wrong.First, I was focusing on the wrong kind of problems a blockchain should solve for banks. The possibility of modifying a past record might not be a bug for a bank but a feature. Sure, it should not be easy, but probably neither completely tamper-proof depending on the circumstances.If they can have a shared ledger to transact between several institutions without the inefficiencies of intermediaries, manual processing and system integration complexity, they will sign up right away. Even if the system is not completely tamper proof, as long as it can be audited, it might be good enough for their purposes. But why […]
