I am becoming a believer, but I am pretty new to Bitcoin. When I am reading the articles about big corporate companies and banks investing a million dollars into research around “blockchain technology,” I ask myself why they should adopt a cryptocurrency, when almost 90% of the supply is already out there, where early adopters have plenty of it? What would make them stick with Bitcoin and not to make their own currencies?
Nothing. Banks cannot adopt bitcoin. Bitcoin is the poison pill of global finance. Bitcoin is the pill you cannot swallow, because Bitcoin is global, borderless, peer-to-peer, censorship-resistant, and not controlled. The current financial system will not allow any of that. Therefore they can’t adopt it.
As banks, they are institutionally trapped in a regulatory system that they built around them to prevent competition, and now they are prisoners in their own castle.
They cannot just leave and go outside of regulation, the same thing which has prevented competition for fifty years and is now their prison.
So they cannot do bitcoin… until they have to because everyone else is doing it. Maybe, maybe not.
They will build blockchains. They will say, “Great, we heard about this very interesting open-source, decentralized, peer-to-peer, borderless, uncontrolled, censorship resistant currency… and we would like to create one just like it!” Only not open, not borderless, not peer-to-peer, not decentralized, or censorship-resistant. We want it to be controlled by us.”
The problem is that, we use the blockchain – which is an incredibly inefficient way of settling global transactions compared to centralized systems, because we want to get the benefits of freedom. Financial freedom and censorship-proof, open global access. Empowerment for all.
And if you don’t want those characteristics, and I can guarantee you that the banks don’t, then why pay the inefficiency price for a blockchain that won’t give you anything?
It will no longer be immutable or unforgeable if one or couple of banks (or some other centralized entities) are doing signing transactions.
But it is a giant honeypot for anonymous, it will be so much fun when they break into bank blockchains, or when they take over the signing keys from the central bank of a fancy new blockchain-based digital currency that they launched, and hold the funds hostage under the most amazing ransomware ever:
“We have your country! We will begin issuing or not issuing currency with your keys now. Or you must change the keys in a very disruptive operation… Unless your queen dresses in a hot dog suit and dances in the garden of the palace on YouTube. You have two hours.”
Blockchains without proof-of-work are not secure. So I have this free advice for the banks: Purchase and install Microsoft SQL, datacenter edition… so that it is scalable. Make one field a hash pointer to the previous field, and another field for signatures as proof-of-authority.
That is not a blockchain, but it will be a hell of a lot more efficient and it does everything you want to do, which is signing instead of mining, and chains of transactions with hashes… perfect. It will be a thousand, ten thousand, twenty thousand times faster.
So, let them do “blockchain.”
We are building the internet of money; they are building the Microsoft FrontPage of money, the Outlook of money, the intranet of money.
What is the intranet? It is the place which is not secure, where you can’t run any of the cool applications, and where all you can do is read stale content approved by your IT department six months ago… about what are the latest human resource policies.
That is what they are building, in a currency.