[Cryptography] IBM looking at adopting bitcoin technology for major currencies

Phillip Hallam-Baker phill at hallambaker.com
Fri Mar 13 12:35:28 EDT 2015

On Fri, Mar 13, 2015 at 11:42 AM, Henry Baker <hbaker1 at pipeline.com> wrote:

> FYI -- Perhaps more accurately: "IBM looking at patenting bitcoin
> technology for major currencies"
> http://www.reuters.com/article/2015/03/12/us-bitcoin-ibm-idUSKBN0M82KB20150312
> Exclusive: IBM looking at adopting bitcoin technology for major currencies
> By Gertrude Chavez-Dreyfuss
> NEW YORK Thu Mar 12, 2015 4:26pm EDT
> (Reuters) - International Business Machines Corp is considering adopting
> the underlying technology behind bitcoin, known as the "blockchain," to
> create a digital cash and payment system for major currencies, according to
> a person familiar with the matter.
> The objective is to allow people to transfer cash or make payments
> instantaneously using this technology without a bank or clearing party
> involved, saving on transaction costs, the person said.  The transactions
> would be in an open ledger of a specific country's currency such as the
> dollar or euro, said the source, who declined to be identified because of a
> lack of authorization to discuss the project in public.
> The blockchain - a ledger, or list, of all of a digital currency's
> transactions - is viewed as bitcoin's main technological innovation,
> allowing users to make payments anonymously, instantly, and without
> government regulation.
> Rather than stored on a separate server and controlled by an individual,
> company, or bank, the ledger is open and accessible to all participants in
> the bitcoin network.
> The proposed digital currency system would work in a similar way.
> "When somebody wants to transact in the system, instead of you trying to
> acquire a bitcoin, you simply say, here are some U.S. dollars," the source
> said.  "It's sort of a bitcoin but without the bitcoin."

The idea of using a hash chain as the ledger in a settlement system is well
established. It would not be remotely difficult to find prior art. Harber
and Stornetta discuss such schemes in their original paper.

The only thing BitCoin added was the idea of combining the blockchain with
the proof-of-work notion and using the latter to get the early adopters
invested in the scheme.

The proof of work scheme is not the only way to prevent a notary defecting.
In fact it isn't even a particularly good way to achieve it. A much simpler
approach it to establish multiple notaries and have them engage in a mutual
meta-notarization protocol on a periodic basis.

While this second approach does open up the possibility of a default, the
operation of the notaries is transparent. There would be no difficulty
identifying the party responsible for the breach and taking them to court.

This is a much better scheme unless the BitCoin ideology is swallowed whole
and we are to believe that the future of commerce lies therein.
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