Failed blockchain project ends with big fine for fibs about it being on track The attempt by Australia’s Securities Exchange (ASX) to replace its core trading platform with a blockchain-based system has ended with an A$20.5 million fine ($14.2 million/£10.6 million), further humiliation after the project flopped. The ASX runs a platform called the Clearing House Electronic Subregister System (CHESS) to …
but, my understanding is Securities Exchanges are very, very fast - like, some traders physically have servers closer to the exchange so deals can go through that bit quicker.
And, my understanding is block chain is a little slow, given network replication and validation.
So, off hand, these don't sound like compatible systems?
Again, from a complete armchair knowledge of either...
Sampler,
Bitcoin style proof of work is designed to artificially limit the number of Bitcoin that can be mined. It keeps getting harder each time, which is one of the many reasons that Bitcoin makes a shit currency.
If you're operating your ledger as an unchangeable record of events, then you don't have to do all the unnecessary work, and waste all that vast amount of electricity - so presumably you can massively improve the performance of the ledger.
I'm also presuming that it wasn't going to be a distributed ledger, because in that case - what would be the point of having an Exchange run by a company that charges you fees? Unless management were literally stupid enough to build themselves out of a job? I mean they were stupid enough to buy a pointless fashion-tech option rather than just getting a faster database using well-understood existing tech - but that's a different matter...
The ledger is designed for transactions without having a trusted third party. As a stock exchange, your whole company schtick is that you are a trusted third party - and that everyone should give you money for being it.
> Bitcoin style proof of work is designed to artificially limit the number of Bitcoin that can be mined. It keeps getting harder each time, which is one of the many reasons that Bitcoin makes a shit currency.
Just saying, but doesn't gold get harder and harder to mine too (with escalating costs)?
(Agreed with the rest.)
Just saying, but doesn't gold get harder and harder to mine too (with escalating costs)?
LionelB,
If true that's not an artificial limitation? Plus I'm not sure it's actually true. There are still gold deposits where the river does most of the work for you, and you just have to collect it. In other deposits - mining has always been expensive.
However it's also irrelevant because gold also makes a shit currency. The hankering for the "good old days" of the Gold Standard is one of the fundamental misunderstandings of economics that leads to people thinking Bitcoin is a good idea as a currency. This is because they're obsessed with inflation - which at even quite high levels is bad, but manageable. And totally ignore deflation - which is much, much worse, and far harder to manange. Look at the long 1870s global deflationary depression as an example.
Also, Britain coming off the Gold Standard in the early 1930s was one of the reasons Britain did better than most other major economies in the 30s. Japan did even better, by using a form of QE - that's where Ben Bernanke got it from in 2007 (him being an academic expert who literally wrote the book on the economics of the Great Depression). And that's why not being on the Gold Standard meant we had better policy options in 2007 - and avoided a global depression. With the side-interest being the Eurozone, where they'd imposed a sort-of Gold Standard, by having a shared currency that no individual member nation could control or print. Which is why they had to wait until they'd caused a 30% collapse in the GDP of Greece (worse than any peacetime economic collapse in history, including Germany and the US in the Great Depression) - before realising that printing more Euros would fix the problem. Which it promptly did.
My apologies that your joke triggered a mini rant. Perhaps I should support trigger-warnings after all...
NO IT WAS NOT. I was there. On the cypherpunks list. In the 1990s.
There are two reasons to increase mining difficulty. The first is, you want there to be easy adoption and a finite total supply. Deflation is therefore built in. Some might consider this to be a Ponzi scheme. While there are similarities, there is nothing hidden or dishonest for anyone willing to read the technical specification, which not particularly opaque.
The second reason is, especially 20-30 years ago, the cost of work goes down with time. You need to make the hashing more difficult to avoid the bad effects of this.
> No idea why anyone would've downvoted on yours.
Because he reminded us of the cypherpunks* list in the 1990s.Which the downvoters just found too embarrassing to recall.
Can you blame them? There they were, all dressing like Zero Cool at the end of Hackers (they'd just over their Case phase and were hiding the "I heart Wintermute" tats under the long sleeves) when suddenly cyberpunks* were out and the cypherpunks became The Thing. Now they had to ditch the glitz and neon, the roller skates and arcade games, to dress only in black hoodies and those damned dark glasses (no matter how many times they watched the Blues Brothers it just didn't work for them). Even worse, all too soon it went mainstream and they had a confusing "Gordon Gecko in striped shirts but still somehow in his mother's basement" moment.
Now they've all grown up and those are just the shameful memories of youth, all behind them now. Damn it, the arcade games were fun!
* if you were going to, the best group to ally yourself with were spending time in secretive groups that sounded like pirates and talked in a jargon inpenetrable to outsiders, all about "varietals" and "acidity regulators": the ciderpunks.
I don't find my time with Cypherpunks to be embarrassing.
But then I stopped reading that list in '94, just before the book market exploded with titles like Bacardi's "Computer Privacy Handbook" hitting the bookstores, "Hackers" (the movie) came out, and then suddenly every kiddie in mummy's basement with a 386 running Windows got an AOL account (adding to the ~2 year-old Eternal September) and became a cryptography expert. And then they discovered 2600, Phrack and BSD and/or Linux and promptly stopped learning because they knew it all.
It was a dark time.
The Internet is FULL! Go away.
But this is the core of the problem with the Blockchain. While blockchains have some very limited use-cases (in zero trust scenarios), just running a Postgres database beats using a blockchain in almost every scenario.
Sure, it doesn't get the investor pumped as much as the blockchain does but a RDBMS is usually cheaper, faster and quicker to implement.
This has always been the problem with blockchain.
The nuts and bolts of the thing is that a truly "serverless" database with a peer to peer voting algorithm to maintain consistency. The more peers you have the longer it takes for the voting to happen and the slower the thing gets. It does not scale.
Pure blockchain is the extreme opposite of a single centralized server, which also has scaling issues.
True solutions to database scalability problems require hybrid solutions that move towards the center of these 2 extremes.
"but, my understanding is Securities Exchanges are very, very fast - like, some traders physically have servers closer to the exchange so deals can go through that bit quicker"
This would be correct. At the last company I worked at, there was an optical span that ran from Chicago to New York City to connect their stock exchanges. They didn't run on existing infrastructure, instead they ran their own fiber in as straight a line as is physically possible. It's so straight it's almost as though they put one end in NYC, the other end in Chicago, pulled it tight and laid it down. Some sections go over rock so tough it couldn't be cut through and buried, and the decision was made to just lay it on the ground rather than route around it to save a few feet The equipment is old, but it allows for transmission without forward error correction.
All this was done to minimize latency. It's been a few years, but if I remember correctly the normal latency from Chicago to NYC is 18ms but on this span it's about 8ms. They paid a mint to install and put up with occasional errors, but when a trade is placed by Joe Blow in Chicago on the NY stock exchange, an exchange trading computer in Chicago can see the submitted trade, submit a trade after him, beat his trade to NYC, and collect a few cents worth of profit by buying Joe's commodity then selling it to him for a penny or two more. And, this is repeated millions of times per day generating tens of millions in profits every day.
There was this one guy who knew how to work on it. When a ticket came in, the procedure was to call that guy immediately and provide any kind of support he asked for. The guy didn't work for us, but he was the only one in the world who knew how the system works, and knew where to get parts. He probably earned what the rest of us call a year's pay each time it broke down. It would be interesting to see what happens when that guy dies, because he was super tight lipped about it. In any case it won't ever be my problem.
As others have pointed out, though Bitcoin is slow as sludge by comparison, blockchain might be able to be fast - I've no idea,
The real bizarre decision was choosing a distributed ledger for a system which was never going to be based outside the ASX's servers.
I've not forgotten how much buzz there was around blockchain at the time. Seemed more akin to the yo-yo and hula hoop crazes than a sound business investment.
Securities Exchanges are very, very fast
That is a description, not a requirement.
People (machines) that trade on the exchange are very very fast, and make money by being faster than other people (machines) that trade on the exchange. It's not a requirement that the exchange itself be fast.
Having a slow exchange is one way of mitigating the problems of having very very fast traders.
It gets complicated from there. If you have a slow exchange, that is a inducement for fast traders to trade around and outside the slow exchange. And a distributed block-chain settlement system both locks them into the exchange, and provides a mechanism for fast off-bourse trades.
That reply could have come from this very forum about ten years ago.
Someone might want to tell the Aussies that blockchain was last decade's meme ... today's scam is Artificial Intelligence.
Might want to move with the times, or be left behind. Burning money is only cool when you're clearly up-to-date and modern suckers.
> Someone might want to tell the Aussies that blockchain was last decade's meme
The decision was made by some high up clown at ASX at a time in the heart of the blockchain brouhaha. For those of us close enough to watch in real time it was like being able to see into the future
Who could ever have predicted that?
My understanding of on-prem "blockchain" means logging transactions to provide an audit trail while applying cryptography to prove its integrity and prevent tampering.
Being a more secure version of transaction logging with incremental checksumming I would have thought there would be little which could go wrong.
But I have no idea what ASX meant by "blockchain", how they were using it, or how they managed to screw up so badly.
I am sure they'll have better success going forward with "AI" now this fiasco is behind them :)
Yep, I've had C-Suite asking about whether we should use AI or is it largely hype, my response is basically, "Remember blockchain?"
About the time of the story I was actually asked whether we should move our data to blockchain (it mostly resides in on-prem SQL databases) - my response had to be polite as swearing at senior execs is not a great career move and I didn't want to hasten my retirement.
