<p>The general idea here is that the blockchain provides some (really cool) new building blocks for us to play with:</p>
<ol>
<li><p>Once something is accepted into the chain and has N confirmations (typically 3+, sometimes 6+), it's extraordinarily unlikely to be deemed invalid.</p>
</li>
<li><p>The &quot;policy&quot; for the validity of a block is codified.</p>
<p>It's still determined by people (which is the hullabaloo about BitcoinXT and block size being debated now in Hong Kong) but it's a world of &quot;one-CPU one-vote&quot;, meaning if the majority of mining power agrees that these are the rules, then those are the rules and they'll continue mining.</p>
</li>
</ol>
<p>Bitcoin itself is just one particular use of this idea of &quot;a chain of blocks&quot; proving that a certain amount of hard work was done to get to that state.</p>
<p>Altcoins (as mentioned in a comment above) are just modifications of BTC, changing some parameters and the name, which is interesting, but unlikely to be as &quot;mainstream&quot; for the simple fact that most people with money in Bitcoin don't fully understand cryptocurrency in general. Some of these do really novel things (ie, Nu, which splits &quot;currency&quot; into one part used for investing and another used for transacting), but AFAIK they're not mainstream yet.</p>
<p>Back to Bitcoin and banks...</p>
<p>Bitcoin effectively allows everyone to act as their own bank. This is really cool (I was amazed when I could &quot;send transactions&quot; and see them show up on another computer without a central authority...), but it comes with it's own drawbacks like... if your wallet is stolen, there's no one to call and yell at (see <a href="https://bitcointalk.org/index.php?topic=83794.0" rel="nofollow noreferrer">https://bitcointalk.org/index.php?topic=83794.0</a>)</p>
<p>Banks want a way to &quot;be their own banks (in the modern way BTC does)&quot; because right now they're centralized and rely on a lot of trust. This means that transactions are slow (ACH is super slow compared to the BTC block time) and can be reversed if enough people make a stink (see <a href="https://www.quora.com/If-my-bank-mistakenly-deposits-1-000-000-into-my-account-am-I-legally-allowed-to-spend-it-before-they-realize-their-mistake" rel="nofollow noreferrer">https://www.quora.com/If-my-bank-mistakenly-deposits-1-000-000-into-my-account-am-I-legally-allowed-to-spend-it-before-they-realize-their-mistake</a>)</p>
<p>When banks talk about using the concept of a block chain, I don't think they're really thinking about currency in the way we think of USD, but rather a &quot;better way to handle trading in an open and untrusted system&quot;.</p>
<p>In other words, banks are saying &quot;We want a way to not trust each other, and still clear trades quickly and efficiently.&quot;</p>
<p>For example, I agree to trade you 1 share of GOOG for $700 USD, and I want that to happen quickly, reliably, irrevocably, and without me knowing or trusting you. Sounds kind of like a Bitcoin transaction, right?</p>
<p>Bitcoin is one way to do it, but that would mean the same currency you use to settle trades is the one you use to buy a cup of coffee -- which can cause issues. If banks just create their own currency that's used exclusively for trading, it's just an Altcoin with a very special purpose and very big backers.</p>
<p>That (I believe) is what SETLcoin (Goldman's idea) does (<a href="http://www.americanbanker.com/news/bank-technology/goldman-sachs-files-patent-for-cryptocurrency-system-setlcoin-1078153-1.html" rel="nofollow noreferrer">http://www.americanbanker.com/news/bank-technology/goldman-sachs-files-patent-for-cryptocurrency-system-setlcoin-1078153-1.html</a>)</p>

CC BY-SA 3.0
2015-12-08T19:20:26.887Z
SETLCoin sounds more like Ripple than like Bitcoin to me. Especially from what I understand it still relies on the approval of third parties.
Murch
CC BY-SA 3.0
2015-12-08T12:20:30.080Z
2015-12-08T12:20:30.080Z
2020-06-16T11:10:03.350Z
JJ Geewax
<p>Well, I found the answer, in a interview with Digital Currency Group CEO Barry Silbert you can read about here: <a href="http://coinjournal.net/barry-silbert-on-why-private-permissioned-blockchains-will-fail/" rel="nofollow">http://coinjournal.net/barry-silbert-on-why-private-permissioned-blockchains-will-fail/</a> </p>

<p>Basically he says banks are too slow and don't cooperate well together. </p>

<p><em>“There’s a lot of talk; there’s a lot of interest, but anybody who has worked on systems at banks can tell you it takes two years to deploy any basic system. So, we’re five [to] ten years out from any of these efforts actually turning into a product that can be used, and while that’s happening, it is my belief that the Bitcoin blockchain is going to address a lot of the issues that were mentioned before around security and scalability. Ultimately, the innovation that’s going to happen, which will be adopted by the banks, is going to be done outside of the banks.”</em></p>

CC BY-SA 3.0
2015-11-06T13:31:08.417Z
2015-11-06T13:31:08.417Z
Off The Gold
<p>I’ve seen articles lately that many large banks including, HSBC, Deutsche Bank, Citigroup, and Bank of America are exploring the use of Blockchain. Knowing these banks, they would surely love to use their own currency instead of bitcoin. Given this, could Blockchain used for a different currency, leaving bitcoin behind?</p>

CC BY-SA 3.0
2015-11-01T13:49:34.333Z
I would think all the big banks\credit card comanies would form a partnership issue 1 trillion coins and be done with it; no mining necessary. Of course they may be to late to the party, I was just curious.
Off The Gold
CC BY-SA 3.0
2015-10-01T18:40:17.183Z
This is exactly what an [altcoin](https://en.bitcoin.it/wiki/Altcoin) is. There are zillions of them, most of them worthless.
Greg Hewgill
CC BY-SA 3.0
2015-10-01T19:15:14.473Z
Worthless now, but once a consortium of large banks creates one or takes one over; bitcoin is toast no?
Off The Gold
CC BY-SA 3.0
2015-10-01T19:17:37.763Z
Maybe. Maybe not. But that's essentially just speculating on what might happen in the future.
Greg Hewgill
CC BY-SA 3.0
2015-10-01T19:21:21.223Z
What benefits would banks have to using bitcoin vs an altcoin that they can control?
Off The Gold
CC BY-SA 3.0
2015-10-02T08:22:40.033Z
The obvious one would be they wouldn't need to incentivize the proof of work needed to secure the blockchain.
David Schwartz
CC BY-SA 3.0
2015-10-02T20:25:12.043Z
Who is going to mine HSBC coin? or Bank of America coin? Unless they allow everyone to participate like bitcoin does then the coin will be entirely centralized leaving no purpose of creating a blockchain. If all the mining is done by the banks they could easily decide to stop mining for a short while when they want to go back N amount of blocks and change the history.
m1xolyd1an
<blockchain>
Could Blockchain be used for a different currency, leaving bitcoin behind?
Off The Gold
# Could Blockchain be used for a different currency, leaving bitcoin behind?

(Asked by: username_0 on 2015-10-01)

I’ve seen articles lately that many large banks including, HSBC, Deutsche Bank, Citigroup, and Bank of America are exploring the use of Blockchain. Knowing these banks, they would surely love to use their own currency instead of bitcoin. Given this, could Blockchain used for a different currency, leaving bitcoin behind?

**Tags:** blockchain

> **Comments:**
> **username_1**: This is exactly what an [altcoin](https://en.bitcoin.it/wiki/Altcoin) is. There are zillions of them, most of them worthless.  
> **username_0**: Worthless now, but once a consortium of large banks creates one or takes one over; bitcoin is toast no?  
> **username_1**: Maybe. Maybe not. But that's essentially just speculating on what might happen in the future.  
> **username_0**: What benefits would banks have to using bitcoin vs an altcoin that they can control?  
> **username_2**: The obvious one would be they wouldn't need to incentivize the proof of work needed to secure the blockchain.  
> **username_3**: Who is going to mine HSBC coin? or Bank of America coin? Unless they allow everyone to participate like bitcoin does then the coin will be entirely centralized leaving no purpose of creating a blockchain. If all the mining is done by the banks they could easily decide to stop mining for a short while when they want to go back N amount of blocks and change the history.  
> **username_0**: I would think all the big banks\credit card comanies would form a partnership issue 1 trillion coins and be done with it; no mining necessary. Of course they may be to late to the party, I was just curious.  

---

## 2 answers

### Answer by username_4 on 2015-12-08. Score: 2

The general idea here is that the blockchain provides some (really cool) new building blocks for us to play with:

1. Once something is accepted into the chain and has N confirmations (typically 3+, sometimes 6+), it's extraordinarily unlikely to be deemed invalid.
2. The "policy" for the validity of a block is codified.

   It's still determined by people (which is the hullabaloo about BitcoinXT and block size being debated now in Hong Kong) but it's a world of "one-CPU one-vote", meaning if the majority of mining power agrees that these are the rules, then those are the rules and they'll continue mining.

Bitcoin itself is just one particular use of this idea of "a chain of blocks" proving that a certain amount of hard work was done to get to that state.

Altcoins (as mentioned in a comment above) are just modifications of BTC, changing some parameters and the name, which is interesting, but unlikely to be as "mainstream" for the simple fact that most people with money in Bitcoin don't fully understand cryptocurrency in general. Some of these do really novel things (ie, Nu, which splits "currency" into one part used for investing and another used for transacting), but AFAIK they're not mainstream yet.

Back to Bitcoin and banks...

Bitcoin effectively allows everyone to act as their own bank. This is really cool (I was amazed when I could "send transactions" and see them show up on another computer without a central authority...), but it comes with it's own drawbacks like... if your wallet is stolen, there's no one to call and yell at (see <https://bitcointalk.org/index.php?topic=83794.0>)

Banks want a way to "be their own banks (in the modern way BTC does)" because right now they're centralized and rely on a lot of trust. This means that transactions are slow (ACH is super slow compared to the BTC block time) and can be reversed if enough people make a stink (see <https://www.quora.com/If-my-bank-mistakenly-deposits-1-000-000-into-my-account-am-I-legally-allowed-to-spend-it-before-they-realize-their-mistake>)

When banks talk about using the concept of a block chain, I don't think they're really thinking about currency in the way we think of USD, but rather a "better way to handle trading in an open and untrusted system".

In other words, banks are saying "We want a way to not trust each other, and still clear trades quickly and efficiently."

For example, I agree to trade you 1 share of GOOG for $700 USD, and I want that to happen quickly, reliably, irrevocably, and without me knowing or trusting you. Sounds kind of like a Bitcoin transaction, right?

Bitcoin is one way to do it, but that would mean the same currency you use to settle trades is the one you use to buy a cup of coffee -- which can cause issues. If banks just create their own currency that's used exclusively for trading, it's just an Altcoin with a very special purpose and very big backers.

That (I believe) is what SETLcoin (Goldman's idea) does (<http://www.americanbanker.com/news/bank-technology/goldman-sachs-files-patent-for-cryptocurrency-system-setlcoin-1078153-1.html>)

> **Comments:**
> **username_5**: SETLCoin sounds more like Ripple than like Bitcoin to me. Especially from what I understand it still relies on the approval of third parties.  

---

### Answer by username_0 on 2015-11-06. Score: 1

Well, I found the answer, in a interview with Digital Currency Group CEO Barry Silbert you can read about here: <http://coinjournal.net/barry-silbert-on-why-private-permissioned-blockchains-will-fail/>

Basically he says banks are too slow and don't cooperate well together.

*“There’s a lot of talk; there’s a lot of interest, but anybody who has worked on systems at banks can tell you it takes two years to deploy any basic system. So, we’re five [to] ten years out from any of these efforts actually turning into a product that can be used, and while that’s happening, it is my belief that the Bitcoin blockchain is going to address a lot of the issues that were mentioned before around security and scalability. Ultimately, the innovation that’s going to happen, which will be adopted by the banks, is going to be done outside of the banks.”*


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