Private 'Distributed Ledgers' Miss the Point of a Blockchain | Bank Think - 0 views
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a new buzzword making waves throughout the financial industry: “distributed ledger.”
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Some say it's a tool to enable transparency by ensuring that all members of a group receive cryptographically secured messages about participants’ activities
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Some are even bold enough to predict that distributed ledgers will end the madness of managing multiple database and reconciliation structures.
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Distributed ledgers have primarily claimed to supplant the need for Bitcoin's mining process by introducing trust requirements among participants. These ledgers also promise users the immutability of Bitcoin without the need for expensive mining operations.
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Blockchain technology is useful not because it offers efficiency in a world of message-passing but because it uses a complex process to settle value between untrusted parties.
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But distributed ledgers do not offer users the ability to easily convert their tokens and messages into fungible units of value. Nor do distributed ledgers escrow value between parties that don't trust each other.
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If a ledger is not a public resource, it will have the pressures incumbent to existing settlement systems plus the overhead of maintaining a shared database among competitors. What efficiency will remain thereafter remains dubious.
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their institutional users will probably find it expedient to hash their private-chain transactions and use those hashes to create bitcoin addresses and then send tiny fractions of a bitcoin to them to register their data at a location that cannot be hacked or changed.
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In other words, all private ledger/blockchains will lead to Bitcoin's Rome, driven there by its low cost and high public accountability.