[Cryptography] Why Nasdaq Is Betting On Bitcoin’s Blockchain

Robert Hettinga hettinga at gmail.com
Tue Jul 28 13:57:58 EDT 2015

> On Jul 28, 2015, at 8:17 AM, Jerry Leichter <leichter at lrw.com> wrote:
> The people (natural and otherwise) who actually buy and sell shares are *beneficial* owners

At IBUC in 2000 or so we were working with CRESTCo, operators of CREST, a database mirror of all the custodial bank positions in the UK, which functions as the securities clearinghouse for the UK and Ireland. In the same way that the Depository Trust Company works for the NYSE. Spinoff of the Bank of England.

We wanted to issue Chaumian (or other) blind signature bearer certificates representing any security on the CREST system, including the S&P 500, collateralized by a custodial account in the UK on CREST. A customer would withdraw their securities and transfer them to out custodial account, we would issue them a bearer certificate on the net. When someone deposited a certificate with us, we would transfer them shares to their custodial account through CREST. 

To make this operate, IBUC would have to be the material owner of those bonds and shares. IBUC would be able to *lend* that debt and equity to short sellers in addition to collecting a premium at issue and redeeming at par. Pretty much the way that American Express is when the get cash. It’s their money until you said it was yours by depositing a traveller’s check. :-)

Nobody over there, including the legal counsel who did the work to create CREST itself, batted an eye. CRESTCo paid us consulting fees to help figure this out. It was a good time to be alive.

Then the dot-bomb went off, and we were dead. Then 9/11 happened, and they dug us out of the hole, drove a stake through our hearts, set us on fire, and sent the ashes into the sun.

The blockchain is just CREST For Everything In The Sky. When the white paper was posted here, I looked at it and thought, meh, book-entry. Thought the same about PayPal too. :-)

You *could* collateralize blind-signature bearer certificates with the block-chain, But That Would Be Wrong.


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