R3 four flew: What's driving banks to flee blockchain consortium?

The value of distributed ledgers and blockchain tech to the financial sector has again come under the spotlight following the departure of several entities from prominent blockchain consortium R3: namely Goldman Sachs, Santander, Morgan Stanley and the National Australian Bank. All four left the consortium this month, and with …

[tiggity]

Cynical?

With blockchains you could, taken to the extreme, implement solutions where it was possible to fully record all the convoluted hops / inter-relationships of particular assets (be that property, cash, etc.) as would allow all stepss to be recorded in teh blockchain.

So, "follow the money" would be far more possible than the current scenario.

I can see a few financial institutions and their clients not been super keen on that.

I would thus expect any blockchain implementation to be superficial.

[Schultz]

Not cynical enough ...

There is a more fundamental problem for banks: they mainly exist as brokers of trust to facilitate the exchange of money. We trust the banks not to steal our money, we trust them to properly account for our money, we trust them to transfer it to somebody else (but only if we instruct them to do it), ...

If we don't need to trust anybody for storing or exchanging our money, it removes the need for traditional banks.

[Version 1.0]

The Departed

Typically, when some new development appears, you will find a lot of companies will sign up to take a look at the technology - that doesn't mean much. Many will take a look at it, report to the upper management who will decide that it's not worth the trouble and quit. Others will sign-on, decide that it's something that they find interesting and stick around - some of these entities will be helpful, others less so and will develop competing technology which they will then sell on as an "improvement" - hello Microsoft?

[Pig Dog Bay]

Its a trap

We still don't know who invented Bitcoin, the only clue is the mysterious Satoshi Nakamoto, which is most likely a pseudonym.

<hat material="tinfoil">

Bitcoin Its a trap by GS, the vampire squid on the face of humanity. The R3 consortium was designed to muddy the waters, procrastinate and stifle any competing blockchains.

The blockchain remembers all transactions, don't think you are safe!

</hat>

It's outta my system now, promise!

[kmac499]

Re: Its a trap

For the sake of argument let's assume Blockchain is practical and scaleable, giving an undeniable record of transactions. Will it be the Banks adopting it as added value to their customers or, the regulators insisting that Blockchain be implemented by the Banks with penalties if they don't.

Forget the genuinely criminal money sloshing about, If I ran the Cayman\Virgin\etc islands I'd be a tad concerned for the future.

[sugerbear]

Blockchain a solution looking for a problem

Blockchain is a solution looking for a problem.

A currency needs someone to back it, trust it and it needs to have real value. The current solutions (cash, cards etc) are already so embedded that blockchain will be just another passing fad that we will look back and laugh at in 5 or 10 years.

[Anonymous Coward]

Re: Blockchain a solution looking for a problem

While I agree, I think the idea is that blockchain will be used for essentially a transaction log. There is no point whatsoever for an individual bank to need/want something that's crytographically provable. With two parties that don't trust each other, that would have some obvious uses, but for bank to bank transactions they already have SWIFT.

So it would presumably be most useful for e.g. Goldman customer A making a transaction with Deutsche Bank customer B, without the banks having to be as directly involved. The problem is that blockchains don't scale for shit, and there doesn't look to be a solution to that problem that doesn't compromise the whole idea of having a full transaction history. I don't care how much bandwidth we have in the future, it isn't practical to shoot multi-terabyte files around to debit my account.

No one except the bitcoin idiots are suggesting using blockchain for currency.

[Unbelievable!]

Why is this under Security?

Surely it should be under business?