Blockchain
Some
more movement / announcements in the Blockchain space this week. I’ve included
a few background threads to highlight the cross ownership (vested interests).
Overstock
Unveils Blockchain Trading Platform at Nasdaq Event
Byrne
also sought to distance tØ from other competitors who are looking to sell
blockchain-based products to the New York financial market, suggesting some may
fall short of delivering on what he considers the true innovative nature of the
technology.
"This is all about true settlement, there's no need for net settlement," he said. "If people come along and say they're introducing these crypto-based platforms, ask if it stays net. Other people working on such systems, some of the ones I know about will keep settlement net, I'm suspicious of why you would even do that."
http://www.coindesk.com/overstock-unveils-blockchain-trading-platform-to/
"This is all about true settlement, there's no need for net settlement," he said. "If people come along and say they're introducing these crypto-based platforms, ask if it stays net. Other people working on such systems, some of the ones I know about will keep settlement net, I'm suspicious of why you would even do that."
http://www.coindesk.com/overstock-unveils-blockchain-trading-platform-to/
Overstock.com and FNY Capital Conclude $5 Million Cryptobond Deal
The $5 million cryptobond Overstock has sold to First New York bears interest at 7 percent per annum over a five-year term. The cryptodebt is unsecured and has no covenants, however, it has both put and call provisions pursuant to which Overstock expects it and First New York may unwind the bond in the fourth quarter of 2015 or sooner. In addition, simultaneous with the issue of this bond, Overstock is making a $5 million loan to First New York at 3 percent per annum with similar put and call terms and with cross default provisions against the bond, thus transferring the economic risk associated with any failure of this technology back upon Overstock
http://globenewswire.com/news-release/2015/07/31/756843/10144107/en/Overstock-com-and-FNY-Capital-Conclude-5-Million-Cryptobond-Deal.html
Overstock Invests in Broker-Dealer Ahead of Decentralised Stock Market Launch
The latest Wired report further indicates that Overstock has purchased a 25% stake in Pro Securities LLC, a New Jersey-based brokerage firm on whose electronic system it says Medici has been built.
http://www.coindesk.com/overstock-medici-pro-securities/
The
Promise (and Limits) of Overstock’s Crypto Stock Exchange
At the heart of Overstock CEO Patrick Byrne’s plan for a decentralized cryptocurrency-based stock exchange is the promise of doing away with a centralized system for settlement and clearing that he has campaigned against for a decade.
For now, though, U.S. securities regulations will force Overstock’s so-named Medici exchange to adopt key aspects of that centralized system — most importantly, a clearing house.
http://blogs.wsj.com/moneybeat/2014/10/24/bitbeat-the-promise-and-limits-of-overstocks-crypto-stock-exchange/
At the heart of Overstock CEO Patrick Byrne’s plan for a decentralized cryptocurrency-based stock exchange is the promise of doing away with a centralized system for settlement and clearing that he has campaigned against for a decade.
For now, though, U.S. securities regulations will force Overstock’s so-named Medici exchange to adopt key aspects of that centralized system — most importantly, a clearing house.
http://blogs.wsj.com/moneybeat/2014/10/24/bitbeat-the-promise-and-limits-of-overstocks-crypto-stock-exchange/
Medici
/ Pro Securities
“We named the project ‘Medici’ for the Medici Bank
of Florence. This bank grew very rich because it invented dual entry
accounting, which engendered trust which led to wealth which in turn led to the
Renaissance. Kind of a big deal,” said Overstock.com Director of Communications
Judd Bagley.
http://www.jdsupra.com/legalnews/overstock-issues-first-cryptosecurity-80686/
http://www.jdsupra.com/legalnews/overstock-issues-first-cryptosecurity-80686/
Symbiont
is building the first issuance and trading platform for smart securities on
blockchain technology
http://symbiont.io/
http://symbiont.io/
Wall Streeters back Symbiont crypto-securities startup
Symbiont, which bills itself as an issuance and trading platform for "smart securities" on blockchain technology attracted seed investment from former NYSE Euronext CEO Duncan Niederauer, Island ECN founder Matt Andresen, Getco founders Dan Tierney and Stephen Schuler, and Allied World Assurance Company CEO Scott Carmilani.
Symbiont was formed through a merger of two other cryptocurrency-based startups, MathMoney f(x) Inc. and Counterparty. MathMoney f(x), founded by Symbiont CEO Mark Smith last year, intended to leverage electronic peer-to-peer networks and cryptocurrencies for financial markets. Smith was also a co-founder of Lava Trading and served as co-head of Lava's FX division.
On
Public and Private Blockchains.
Consortium blockchains: a consortium blockchain is a blockchain where the consensus process is controlled by a pre-selected set of nodes; for example, one might imagine a consortium of 15 financial institutions, each of which operates a node and of which 10 must sign every block in order for the block to be valid. The right to read the blockchain may be public, or restricted to the participants, and there are also hybrid routes such as the root hashes of the blocks being public together with an API that allows members of the public to make a limited number of queries and get back cryptographic proofs of some parts of the blockchain state. These blockchains may be considered “partially decentralized”.
https://blog.ethereum.org/2015/08/07/on-public-and-private-blockchains/
Consortium blockchains: a consortium blockchain is a blockchain where the consensus process is controlled by a pre-selected set of nodes; for example, one might imagine a consortium of 15 financial institutions, each of which operates a node and of which 10 must sign every block in order for the block to be valid. The right to read the blockchain may be public, or restricted to the participants, and there are also hybrid routes such as the root hashes of the blocks being public together with an API that allows members of the public to make a limited number of queries and get back cryptographic proofs of some parts of the blockchain state. These blockchains may be considered “partially decentralized”.
https://blog.ethereum.org/2015/08/07/on-public-and-private-blockchains/
Bitcoin
Bitcoin
latency
All transactions are broadcast between users and usually begin to be confirmed by the network in the following 10 minutes
https://bitcoin.org/en/how-it-works
All transactions are broadcast between users and usually begin to be confirmed by the network in the following 10 minutes
https://bitcoin.org/en/how-it-works
Satoshi Nakamoto's original paper is still recommended reading for anyone studying how Bitcoin works.
https://bitcoin.org/bitcoin.pdf
DESIGN OF A SECURE TIMESTAMPING SERVICE WITH MINIMAL TRUST REQUIREMENT
This paper is referred to in Satoshi Nakamoto's original paper
http://citeseerx.ist.psu.edu/viewdoc/download;jsessionid=0CBDB03137597E738F7A82ED00044D06?doi=10.1.1.13.6228&rep=rep1&type=pdf
Comment
Initially
I was excited by the Overstock announcement. But this initial excitement is
diluted with the cross holding and risk free hedge for the first user. It is
also interesting that the blockchain market, Prosecurities, still uses DTCC.
T0
(Tee zero) looks interesting, but again, I can’t actually see anything going
through it’s books at the moment. The split out of counterparty into Symbiont
is also interesting…along with their investors…market structure and HFT.
So,
to the question. Do I think this blockchain thing is real or hype?
One,
I continue to think the technologists are ahead of the practitioners. What is
required are tangible use cases. I note Financial Services responds more to
evolution than revolution.
Two,
there are good reasons that market structure has evolved to where it is today.
Things like netting (gross, directional, bilateral, directional etc. all have
their place). Then there is latency. Think Herstatt risk. Think time stamps at
the microsecond level. 10 minute
validations of blocks / hashs is not good enough (IMHO).
Three,
we have the cost of the infrastructure. The reward / compensation for these new
miners. That business model also needs to be considered.
The
most positive read for me was the middle ground between public and private
blockchains (the ethereum link). There is the concept of a Consortium
blockchain. Now, that is an idea of real merit! (just industry consortia are a
nightmare).
Regulation….(and statement fines)
Making
a statement...
Former City trader Tom Hayes given 14-year sentence for Libor rigging
http://www.theguardian.com/uk-news/2015/aug/03/former-city-trader-tom-hayes-convicted-of-libor-rigging
Former City trader Tom Hayes given 14-year sentence for Libor rigging
http://www.theguardian.com/uk-news/2015/aug/03/former-city-trader-tom-hayes-convicted-of-libor-rigging
ITG woes signal continued scrutiny of dark pools
Investment Technology Group (ITG) ousted its chief executive of nine years this week, less than a week after announcing that it was setting aside $20.3 million for a potential settlement with the Securities and Exchange Commission over past issues related to the operation of its POSIT dark pool.
Based on the amount set aside, the settlement would be the largest U.S. penalty ever by a firm over issues related to a dark pool. The issues reportedly stem from a test of a proprietary trading program run within POSIT from 2010 until mid-2011. The proprietary trading program, run by an ITG subsidiary called AlterNet Securities, allegedly accessed private client trading information unavailable to others, and used that information to trade against clients' order flow.
http://www.fiercefinanceit.com/story/itg-woes-signal-continued-scrutiny-dark-pools/2015-08-04
And the cricket...
The worst of them: Australia’s 18.3 over innings was the shortest in Test history; never have the fourth, fifth and sixth wickets fallen so early; at no time in Ashes history have the sundries been a side’s top scorer. Pity the nation
http://www.theguardian.com/sport/2015/aug/07/ashes-disgrace-rip-cricket-and-a-nudie-run-how-australias-media-reacted
And
the rugby…
Ummm,
rugby will be the winner on the day. (i.e. the Wallabies will lose to the ABs)
Stuff:
Disruptive Technology in Space....
Disruptive Technology in Space....
If
you like Hitchhikers Guide…you’ll like this…
Nasa's 'impossible' fuel-free thrusters DO work: German scientists confirm viability of super-fast space travel that could slash a journey to the moon down to 4 hours
According to classical physics, the EMDrive should be impossible because it seems to violate the law of conservation of momentum.
The law states that the momentum of a system is constant if there are no external forces acting on the system – which is why propellant is required in traditional rockets.
Nasa's 'impossible' fuel-free thrusters DO work: German scientists confirm viability of super-fast space travel that could slash a journey to the moon down to 4 hours
According to classical physics, the EMDrive should be impossible because it seems to violate the law of conservation of momentum.
The law states that the momentum of a system is constant if there are no external forces acting on the system – which is why propellant is required in traditional rockets.
Finally, a plea for
help.
As mentioned I’m
doing a swim, across the Solent (crossing from mainland to the Isle of Wight) in
aid of Motor Neurone Disease. As part of the swim Risk Assessment I need to
pass a fitness test. Basically I just swim 200 laps of a 25m pool and I need someone
to note time splits every ten laps. It should take just under 2 hrs and can be
done any weekday (whatever time / before / during / after work). I’ll even buy
you a guilt free beer afterwards!
Have a great
week-end all…preferably not watching the cricket.
I’m off to the
pool.
Scott.
http://clearingandsettlement.blogspot.co.uk/
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