Quoting Wikipedia: "Several companies have sued the DTCC, without success, over delivery failures in their stocks, alleging culpability for naked short selling. [...] Critics blame DTCC, noting that it is the organization in charge of the system where it happens, alleging that DTCC turns a blind eye to the problem, and complaining that the Securities and Exchange Commission (SEC) has not taken sufficient action against naked shorting"
Doesn't sound that trustless to me. With a decentralized setup as in Quorum at least everybody can calculate how much they have to trust the miners.
If your company has miners of their own, you are part of the whole system and not just using a third party service.
> And that company is exactly what this tech. replaces. That company does not provide its services for free. This blockchain product does.
There’s no such thing as “free”. You’re either paying directly or indirectly. The DTCC is owned by its member organizations so it does not have a direct profit incentive anyway.
I highly suggest reading more on the topic and the problems it’s meant to solve before pitching “But blockchain!” as a solution.
Sure there is, simply by virtue of being the only solution available. All of a sudden, a simple database becomes a sprawling corporation with a multimillionaire board of directors, waging political war among themselves for resources, power and an ever larger number of underlings.
The private sector is not magically superior to a state bureaucracy, without any competition or political pressure to reform it can act even worse.
> a sprawling corporation with a multimillionaire board of directors, waging political war among themselves for resources, power and an ever larger number of underlings.
Can you explain? To me, it seems like control is what matters. And the DTCC controls access to its databases, whereas JPM controls access to its blockchain. Whether the parent organization is adding a +1 to a database or a +1 to cryptographic ledger seems inconsequential.
Only for the initial group of banks invited to participate. After that it would be up to the consensus algorithm to decide if a prospective member can join.
A large business "has" a lot of things. Why bring up board of directors specifically? I'm sorry but this sounds more like fumbling to grasp a point rather than an actual example of something useful.
I didn't bring it up, the comment you responded to did. You said that it didn't get rid of it, but it does. It gets rid of the entire DTCC company, and all of the salaries that go along with that. All of those costs go to zero.
I'm talking about competition, whatever the technical implementation. That's precisely the point, cost is determined by market structure and incentives, an inferior solution can be much cheaper due to lower margins.
You seem to be missing the point. Operating this blockchain is nearly free. Building it out is a capital cost. Once its built, its ongoing expenses should be low.
You don't mine in a permissioned system like quorum. The CPU load is minimal, and when running the quorum clients, you are basically just checking to make sure everyone in the system agrees on the transactions. If someone tries to cheat (or spam or whatever), you kick them out.
But then we're back to square one, aren't you basically describing a distributed (but still perfetly "trustful") database? Isn't that effectively what this DTCC provides?
What in this allows JPMorgan to provide the same service for free? Is it really technical innovation or is it just a different business model? Wouldn't they be able to do the same thing without using anything cryptocurrency/blockchain related?
I feel like I'm missing something obvious but I don't see what it is.
A blockchain is a distributed non trustful database with a method for resolving disputes built in. Roughly speaking in something like quorum, everyone checks everyone else's work, and the majority consensus is ground truth. DTCC requires a trusted third party to administer the database. Quorum doesn't. Quorum could presumably also replace intra-bank transactions as well (instead of maintaining some other kind of database).
I guess the missing piece that seems to break people's brains; the ledger in the distributed database represents a dollar amount (in the case of quorum's dollar thing) and it has money-like rules, unlike, say, postgres which ultimately relies on some other piece of software to make ledger like transactions.
Unless I am mistaken, DTCC doesn’t provide any trust for internal account balances at JPMC. It only provides trust for the details of transfers. These tokens provide trust before and after transfers. The tokens themselves actually provide no trust during transfers and the transfers are only allowed by trusted parties as a result.
Also, DTCC only handles securities not currency so this doesn’t exist at all.
What actually you should be arguing is that the JP coin and the DTCC need to be combined as they each only provide trust in a certain part of the ecosystem.
Technology can be more than new things; it can also be made of combining old things in new ways, or finding new uses for old things, or even simply new ways of thinking. If we removed "cryptocurrency" and "blockchain" from the above, they'd still have a new settlements process. They're using a distributed ledger to make the process safely automateable and reduce audit costs.
what you're missing, that's obvious, is that blockchain is a solution looking for a problem where none exists. The word was imbued with virtue, and at this point blockchain has come to mean 'virtuous database'
If someone tries to cheat, you suspend their participation if you are empowered to do so, and / or report them to the appropriate regulatory bodies / law enforcement.
Blockchain doesn’t allow anyone to circumvent anything.
Unless it’s a perfectly spherical blockchain operating in a vacuum.
Permissioned blockchain generally doesn't have wasteful mining because all the participants are known. So the nodes just end up signing transactions. Double spend attempts can then be prosecuted.
Maybe JP Morgan thinks it's possible to improve on the DTCC. Your link describes some controversy over their handling of naked shorts, for example. Or maybe the new system would be cheaper, or JP Morgan wants to implement new features themselves, without having to convince everybody to trust JP Morgan to track their money.
The thing is that it can take days for a transaction between two different regional banks to clear. Whereas with the solution they're proposing, I'm guessing it'd take much less time than that.
Many people are trying to solve this problem (see: Corda, XRP)
>> So what happens when a mistake happens on the blockchain?
Most popular Blockchains haven't had any major issues in years. Some projects have had bugs which lead to the network stopping for a few minutes but no lost funds.
>> I think most people here are aware of inflation
How much new money did the Fed inject into the US economy in the last decade?
Based on the constantly growing corporate sector, we know who ended up with most of that money: Big corporations and their shareholders.
They got most of that money by locking other people out of opportunities. That is the primary business of corporations today; monopolizing financial channels where the money flows easily and letting hard working individuals fight for the scraps.
https://en.m.wikipedia.org/wiki/Depository_Trust_%26_Clearin...