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Bank of England @bankofengland

Bank of England proud to partner with @PwC_UK on its first distributed ledger proof of concept http://ow.ly/2Tqh301me0b #FinTech

Now it starts to get interesting.....

http://www.bankofengland.co.uk/Pages/fintech/default.aspx

FinTech Accelerator

In his Mansion House speech published on 17 June, the Governor of the Bank of England announced that the Bank is launching a FinTech Accelerator to work in partnership with FinTech firms on challenges that we, as a central bank, uniquely face. The Accelerator will work with new technology firms to help us harness FinTech innovations for central banking.

In return, it will offer firms the chance to demonstrate their solutions for real issues facing us as policymakers, together with the valuable ‘first client’ reference that comes with it. With time, the Accelerator will build a network of firms working in this space for the benefit of us and them alike.

What does the Accelerator do? – Aims of the work:

The FinTech Accelerator deploys innovative technologies on issues that matter to the Bank’s mission and operations. Working in partnership with FinTech firms we will seek to develop new approaches, build our understanding of these new technologies and in some way support development of the sector.

How will the Accelerator engage with firms?

The Accelerator will appoint FinTech firms to run short Proof of Concept (POC) projects in a number of priority areas. Each POC will have clearly defined requirements and success indicators.

The selection process will be competitive and transparent. We will make clear our priorities, so that relevant firms can register their interest. From there a short list will be developed, and senior Bank staff will select the firms to work with on a POC. The selected firms will have the opportunity to test and demonstrate their products in a live environment, working closely with Bank experts. At the close of the POC, the outcomes will be assessed against the initial criteria, and the Bank may publish a case study or act as a reference client.

Successful firms may have the opportunity to re-tender through an open process to become an on-going partner of the Bank.

What is in the current cohort?

Below are some examples of current projects.

  • BitSight: Uses publicly available bulk data to assess firms’ cyber resilience, including looking for evidence of malware on a firm’s systems, signs of known software vulnerabilities, or weak encryption, which can be used to form a view on the information security of a firm over time. For the Proof of Concept, we will be looking to engage with BitSight to evaluate the Bank’s own resilience and to assess the benefit of this service as one of the range of information security tools that we use.
  • Privitar: Provides tools to anonymise and desensitise data. As part of our Proof of Concept, we will first test this software on a manufactured dataset to examine the analytical value of the desensitised data. We will then look to assess the capability of the tool on data held internally to establish if this will allow us to provide wider access to data for researchers within the Bank.
  • PwC: We have invested in understanding the technology of blockchain and distributed ledger, working with PWC. The team built a multi-node scalable distributed ledger environment, which contained several smart contracts to illustrate the applications of the technology. This has enabled us to better comprehend the resiliency benefits and practical limitations of the technology. These are detailed further in the linked publication.
Areas of Interest

Other priority areas are listed below, but we also welcome expressions of interest from firms working in other areas of FinTech.

We are interested in new ways of structuring and analysing large data sets and data gained in regulatory reporting. Other technological developments of interest are around machine learning, particularly in relation to anomaly detection and pattern recognition.

We would welcome expressions of interest or proposals for the Bank to participate in, or act as a silent observer or partner with an existing pilot distributed ledger network. Pilots should test how the technology functions in ‘real world’ scenarios. Where relevant, we will also be interested to explore the potential regulatory implications from the use of the technology.

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Bank of England @bankofengland

Bank of England proud to partner with @PwC_UK on its first distributed ledger proof of concept http://ow.ly/2Tqh301me0b #FinTech

Now it starts to get interesting.....

http://www.bankofengland.co.uk/Pages/fintech/default.aspx

In simple English please for those of use not conversant in Bitcoin speak. Quick one or two line summary of what all that article basically says?

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In simple English please for those of use not conversant in Bitcoin speak.

Tldr: the government is exploring a cryptocurrency that lends itself to centralisation.

Bitcoin is a decentralised, peer-to-peer currency. It uses an extremely limited scripting language to ensure security, and has never been hacked. It offers an immutable ledger of every transaction since its inception and is open to anyone without discrimination.

Ethereum differs from Bitcoin in that it uses a Turing-complete language that allows for 'smart contracts', these are computer programs executed across a peer-to-peer network similar to Bitcoin. But with this extra power, comes extra responsibility and risk.

PWC has for some time been working on Ethereum-based currency and other related projects. The problem faced by national governments with regard to Bitcoin is its pseudonymity - governments like all actions to be tied to individual, legally responsible actors. Ethereum's Turing-completeness makes it easier to create currencies where the programs (for example financial transactions) only execute if you input certain information, notably proof of your identity.

Ethereum's claims to decentralisation are being sorely tested today, following an unexpected use of a smart contract which led to some $60m being transferred to a single account. The response is high demand for the ledger to be reset to its state before this money was transferred. This would discriminate between participants in the system and destroy claims to immutability.

Nevertheless, it's likely governments will proceed with plans to implement Ethereum-based cryptocurrency, because these 'drawbacks' are seen as advantages if the desired outcome is centralised authority.

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normal accounting you have two columns a 'credit' and a 'debit' the idea is that once you list all the spends and income into the ledger that at the end it all tallies up. Its to make sure accounts make sense, a bit of a check.

This is called double entry book-keeping.

The issue many have with central banks and private banks is that they can create as much money as they want regardless of double entry book-keeping as they see loans (debt) as an asset not debt. So they want to lend as much as possible. This should not be too bad until the banks got deregulated and basically tried their best to take down the world economy.

When you control the books you can basically manipulate everything as much as you like, such as paper gold contracts, or quantitative easing or whatever. People cant see the books, and central banks basically want to destroy personal wealth so people feel they are getting richer via inflation.

This creates a bit of a crappy world to live in, as the asset holders get richer and richer and the working man (who actually improved the world we all live in) gets poorer and poorer.

Then came along bitcoin.

Bitcoin is similar to double entry book-keeping expect in two very key ways.

- bitcoin is triple entry bookkeeping, everyone who has bitcoin money also has a record of the bookkeeping with each token, so the books can not be messed with at all. if you have 1 bitcoin, its one of 21 million. end of. no messing about with banks trying to destroy the world. no inflating away any value you hold. The books is a record of every transaction to every individual, there is no way to print any more bitcoin, no way to fake it. no way for central banks or government to control it. Basically its money free from damaging control on our lives. (driving up the price of housing for example).

the record bitcoin holds is called 'the blockchain' it is just a transaction history, its completely distributed and no one controls the system as a whole (unlike central banks and sterling)

The bank of england can recognise the power of bitcoin, as eventually as the central bank continues to destroy the value of money, and making people who are in huge amounts of debt rich, eventually people will realise that bitcoin is the better money to use than crap that devalues and is under the whim of vested interests.

Bitcoin takes away the power of the super rich, the central banks, it creates a better money and a more stable world when bankers cant get rich with fraud. It makes a lot of bankers redundant, it will take away the power of the city of london.

So what do central banks do in the face of their own demise? they desperately try and copy bitcoin, they want to create their own blockchains (which they control), they DO NOT want people to free of their power.

But even with banks trying their own technology, bitcoin is not going anywhere. Maybe a few central banks will impliment their own blockchains for a period of time, but they will inevitably want to devalue the currency again. at which point the central banks blockchain fails.

this could take 50 years to playout, but bitcoin will survive.

bitcoin will eventually be the future and a bright future it will be.

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in short:

central bank = corruption, manipulation, high house prices. bitcoin frees people. central bank worried, no like people free. central bank copies enemy. central bank fails, people finally free.

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in short:

central bank = corruption, manipulation, high house prices. bitcoin frees people. central bank worried, no like people free. central bank copies enemy. central bank fails, people finally free.

much obliged to both of you for the explanation - and interesting.

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Out of curiosity do these have the artificial scarcity of bitcoin? i.e. new currency can only be created as it is mined (decrypted) l kinda expect there will be no such limit on anything the est' wants to use as it would undermine their divine right of theft through continual currency creation and inflation.

Presume they like the ability to trace via the identity auditable ledger, but why would anyone use that if they had a choice?

l am trying to understand what the benefit of it would be for the common man if anything?

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Bank of England ‏@bankofengland

Bank of England proud to partner with @PwC_UK on its first distributed ledger proof of concept http://ow.ly/2Tqh301me0b #FinTech

Now it starts to get interesting.....

http://www.bankofengland.co.uk/Pages/fintech/default.aspx

...this is all smoke and mirrors ..the real gaps are in values and ethics ...that is where there focus should be for starters ...the rest including technology falls in place without fancy announcements ...build your house on rock ...not sand...is the message they need..... :rolleyes:

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Well if you strip the politics and morals out of it, the technology is very efficient.

it would make banks a lot cheaper and more efficient to run. less delays in transactions and money transfers.

also security would improve over traditional methods. you would need a lot less people and I.T staff to work older legacy systems. (Always nice to see bankers on the scrap heap)

it would be nearly impossible to hide money from the state, and taxes would be easier to collect. None of this landlords spending capital gains before paying tax lark. Good!

The positives are much reduced criminal activity. the downsides are that a central bank block chain would not stop devaluations (stealth wealth redistribution from poor to rich).

There are plus points and negatives to a central bank block chain and bitcoin.

Ultimately with 'hard money' we would not of had the housing bubble and continuing high house prices as credit would be restrained.

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in short:

central bank = corruption, manipulation, high house prices. bitcoin frees people. central bank worried, no like people free. central bank copies enemy. central bank fails, people finally free.

I cannot see the point of a blockchain for banks, unless of course there was a way to print money ad infinitum by pressing the "Print" button on your key pad.

From that i conclude must be a simple propaganda issue. Do you trust the central banks! NO!

Edited by GreenDevil

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This has all played out before with intranets vs internet. The outcome will be the same.

...and we have had all the cheating and losses ....boom and bust...that is what a Central bank should be overseeing..although Gordo whipped that out set up the FSA reporting to himself...and look what happened ...they need to get back to basics and show they can run a clean market.... :rolleyes:

Edited by South Lorne

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Out of curiosity do these have the artificial scarcity of bitcoin?

No, there's no fixed cap written into the Ethereum code and nothing to suggest this is an issue PWC, Deloitte or the BoE have been addressing in their implementations.

l am trying to understand what the benefit of it would be for the common man if anything?

The advantage for banks is mainly around settlement times. For governments, it's the opacity of the system. For the common man, it may become easier to pay your taxes if self-employed, easier to access a personal account history of all your own transactions, easier to prove payments in the case of dispute. If none of those sound convincing, that may be because at no point have I seen a focus on solving everyday problems of average Joes and Josephines.

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So if my brain understands it , i buy ( convert ) say £10 sterling into bitcoin , than use bitcoin to buy X?

D

PS just to let those who fancy a look at it , the current install is 80BG!

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You can spend bitcoin, but its better as a very long term store of value and a gamble that it will go higher.
Plus endless hours on entertainment being involved with bitcoin, new stores, the price swings etc.

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You can spend bitcoin, but its better as a very long term store of value and a gamble that it will go higher.

Plus endless hours on entertainment being involved with bitcoin, new stores, the price swings etc.

Plus endless hours of fun when your package arrives through the door ;)

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A blockchain is from a technical perspective and extremely inefficient way to operate a distributed transaction system. Bitcoin only lives with it because of its unique property of providing distributed decision making. A blockchain with a central authority is completely and utterly pointless.

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So if my brain understands it , i buy ( convert ) say £10 sterling into bitcoin , than use bitcoin to buy X?

D

PS just to let those who fancy a look at it , the current install is 80BG!

There are wallets like Electrum, that you can use and don't need to download the entire blockchain. And yes the X is a growing subset of available objects in the world that you can buy with bitcoin.

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A bank, in essence, is little more than a secure repository of ledgers.

A banking system is thus little more than an interconnected network of ledgers.

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