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Originally Posted by Baronvonellis
Yes, I've studied the tech behind bitcoin, and attended a lecture by an FBI agent discussing bitcoins. The technology behind it is open source available for free to anyone, it was never copyrighted. So yes, banks can use the technology to make financial transactions quicker and safer. But this doesn't affect the value of bitcoin. The banks don't have to pay anyone to use the technology. If Bank of America has BAcoins in a few years, all these other ones will go down, as mainstream people will use their trusted banks coins.
And if these coins ever go mainstream, you can bet that governments will clamp down on it hard. It's someone printing money, governments have always controlled the money supply and are very zealous in guarding that privilege.
What else is the potential power you mentioned?
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First of all, open source doesn't not mean free of copyright automatically NOR does it mean no copyright, legality, etc. This is a common misconception of people who don't develop software or who have never used properly or contributed to an open source project. Just because you are using an open source piece of software on your website or app for example doesn't mean you can do whatever you please and not even give credit to what you're using. It also doesn't mean you can necessarily modify it to however you want. There's loads of open source licenses out there and each have their own terms on them - some are extremely open to use and don't even need citation while some of them require you to give credit in some way (sometimes set by the license itself) for just using it and not even modifying it. I used to be a software developer for IBM - IBM has entire teams of people, including lawyers, dedicated to making sure that open source software, libraries/APIs, etc are being used legally. There are formal review processes for any open source library, software, etc you want to use. Most sizable companies that have sizable software development practices have these in place to make sure they aren't going to get sued or taken to court to stop the release of software, websites, etc. Yes, even though you are free to use these things, there's still legal limitations set by the licenses that apply to each library, software, etc. Pretty much everybody who's in software development whether a developer themselves or just managing it has to go through training so they know what "Open Source" actually means since people in the mainstream throw this term around loosely (again, at companies who give a shit to not get sued or blocked from going to market). So while I know what you're saying, be careful when you throw around the term "open source" as if it means anybody can do whatever they want with it. That's not what it means.
You are correct that anybody could copy bitcoin into a new coin, but what's the point and why would you think that even matters at all? Let's taken an example. Pretend someone got access to every single piece of software Google developed from the PageRank algorithm to GMail. They copy it onto a new thing called Elgoog.com. Unfortunately they couldn't get the users that Google had copied over or most of their massive amount of data - they just have the software. Nobody is using Elgoog.com because it's new and it barely has any users. You find out about this. Are you going to use Elgoog.com? No. Unless you are a big anti-establishment/F-You-Google person, why would you? It's literally the same as Google but with no users and only 0.00001% of the data that Google already has. There is literally no business justification for you in that case to magically switch over to using this new thing.
So with Bitcoin - someone forks off a new branch from Master and creates their own clone coin that's an exact replica with no modifications whatsoever. Why the hell would you even invest in that? Why would you even give two shits about it? There's literally no reason to care or invest in it as a legitimate business case. Unlike BTC, nobody is using this new coin as a form of payment in any way - either for goods/services business wise or person-to-person transactions. No, a site who accepts BitCoin cannot automatically magically accept MarothisuCoin just because it's a clone of BitCoin. It doesn't work like that. That would be like thinking that whenever you send someone something to GMail it magically also goes to ElgoogMail because it was a software clone. Again that's not how these things actually work in real life. Making a clone of BitCoin doesn't make new Bitcoins - it makes new MarothisuCoins. Completely separate entities on their own independent price curves. There is a sucker born every minute, so you have a lot of people who would invest in MarothisuCoin because they saw the price go up. Some of them are dumb enough to think that price is an actual way of measuring utilitarian value while others just do it because they know the former are out there investing and realize they can make a quick buck. So with these, there is really nothing to worry about in the end because nobody is actually accepting this as payment anywhere in the entire world. You need to pay someone through Bitcoin, no you can't use your MarothisuCoin to pay them without converting to Bitcoin first. And then they're probably going to laugh at you and ask why they would want something like MarothisuCoin as there's no uses or demand for it. This is simple trade economics - there's nothing really special going on here. Bitcoin, and every other coin, is set by supply and demand. Bitcoin has a limited supply. No, you cannot create new Bitcoin - it's impossible. The supply is set by something called mathematics. It would be like saying you could magically create more Gold out of thin. It's an element - you cannot do that. Bitcoin is essentially the same way. You can basically create fools gold and sell it to idiots (though Fools Gold probably has more uses than a crappy altcoin clone). Anybody who knows about BTC for example and actually read into some clone would say "Why the hell would I invest in MarothisuCoin? It's the same as Bitcoin, not accepted anywhere, and there's no demand for it." And you know what, if all of a sudden MarothisuCoin got a ton of demand, then that's how the market deemed it should go. It's no different than if you had two companies who do much the same thing where the stock of one company was a lot higher than the other and magically people just started investing in the other company and stopped in the bigger volume one. You know, it's weird but that's how the market determined it would go at some point in time.
As far as changing something in the actual code base goes, it's not like anybody can go on there and actually fully commit something to release. There are tons of contributors to coins like Bitcoin and it's managed on a Source Control Management system (SCM) called Git. There are most likely only a few people in the entire world with power to actually commit/merge code to the master branch which then follows some sort of actual release schedule (i.e. merging something to Master doesn't automatically propagate to everyone in the world. There's a set date/time when it would happen - not much different from how a lot of companies follow software/web app/phone app releases). Anybody could try and change the code, except they have to go through a review process (called a Pull Request in Git) which is picked apart by pretty much anybody who wants. As everybody has the same common goal, it would be against everybody's best interest to start changing how the actual main algorithm(s) work. Not only that, but you'd need a ton of people in on it, and anybody not in on it (which is tons of people) would call BS on various PRs. These are also easy to revert and also alert the world that something nefarious is going on. In reality, this is not any different than how most software is created at any company. At the end of the day, even if 500,000 people agree that the change is good, realistically only a few people can actually commit the change into a branch that may become reality for everyone.
Here is an example of a PR in Bitcoin:
https://github.com/bitcoin/bitcoin/pull/13200
You cannot just commit code and have it out there. All of this goes through formal review process and is in the benefit of the contributors to actually keep the main point. All of these things use cryptography to work. These things are mathematically provable and as cryptography is extremely difficult to understand, most people in the world won't understand it enough to even know where to begin to change things. You'd need someone very smart to be able to pull the wool over everyone's eyes with code commits. Bitcoin uses an algorithm called Double SHA-256 (SHA-2 - designed by the NSA if you're wondering) for its hashing. As far as I know, this hasn't been cracked yet and someone who cracks it will either have an extremely important mathematical breakthrough that could benefit all of society if used correctly, or they have massive server farm that cost a fortune or are using an extremely expensive quantum computer. Needless to say, if someone cracks this then you have
A LOT more important things to be worried about than just BitCoin. You should be worried about everything that is on the internet not being secure anymore and your secure sessions between you and something like a bank being easily hackable. BitCoin would be the absolute lowest of anyone's worries in that case. I fear for what would happen if some of these SHA algorithms were cracked and made public in how to crack it.
In reality, in my opinion at least, there's really only a few cryptocurrencies out there worth a shit. One is Bitcoin as it was the first application of a currency using Blockchain (though the idea of Blockchain has been around for years, actually but that's another story). Another is Monero - Monero is way more private than Bitcoin. You can actually trace back transactions in Blockchain - in Monero? Good luck with that. This gives it an advantage in some ways but also a disadvantage if it ever wants government backing of any kind. Then you have Ethereum which I don't believe is actually very legit as a payment system but it is a platform too so that in and of itself is useful.
You said that banks are going to implement their own coins. No they won't. Why? Well let's take Bitcoin for example. While Bitcoin is really interesting and removes some processes that banks do, the processing system for more real time transactions that something like VISA does is slow as all hell. When you are at your local bar paying for a beer with a credit/debit card, the transaction verification might only take a few seconds. With Bitcoin's system it could take a few minutes. This is bad and works against Bitcoin. If Bitcoin ever handled the load of VISA's system, the damn thing could take hours to verify your $6.50 transaction. Banks know this - it's not really useful at this point in time. There is something called Lightning Network which should make things better, but VISA is simply faster by orders of magnitude. Also, for awhile something like Bitcoin was really volatile in price (right now, not as much). So one minute your beer is $6.50 and the next it's $10. The only way Bitcoin would actually be accepted as a real currency is if the price was not volatile to the number of pips as it is (using this term from FOREX so everyone may understand) and also the system to verify transactions is similar to or faster than something like VISA. However, then you have the stuff like fraud services to deal with. Banks do a lot with this and Bitcoin removed it. It may be useful for what I'm about to say below, but not useful in all situations - even for things like reversing transactions (which you cannot do with BitCoin - another mark against it). A lot of people rely on banks for their protection services which is great, but some people could care less when they're doing a transaction to a trusted vendor.
However, at the same time, if you are a company who needs to pay a vendor for some service, then you are most likely going to be paying through Automated Clearing House (ACH). In America, the systems for ACH are pretty antiquated. ACH though does tons of different checks, a lot for fraud and in the end the payment to the vendor that is literally in the office suite next to you may literally take 2+ days to clear through ACH. However, if you were using Bitcoin or something like that, it could be the matter of minutes or a few hours at most. In this case, something like Bitcoin would be more useful to these companies especially if they already trust each other and don't really need established bank and ACH fraud protection.
This is where something like Ripple is interesting to me. They have their own coin, but their processing system is also fast and banks are actually using it. Even AMEX has a partnership with them. So do Santander, RBS, Bank of England, Western Union, BMO, etc.
Bitcoin is an implementation of a technology called Blockchain - Blockchain in theory has been around for a long time and isn't necessarily new even though people think it is. It's kind of like cloud technology - it existed for awhile, but someone gave a catchy name to it, so people believed it was new. They also started implementing it to show others how advanced they were. I think of Blockchain as the same thing in a way - it's existed for awhile, but now there's a cool name for it so everyone thinks they need to use it. The thing is that it IS an interesting technology, but a lot of the things that people have implemented using it are pointless and they did not need to use Blockchain. Bitcoin happens to be an interesting implementation of this regardless of whether you think it's BS or not.
A society needs R&D of some kind (whether official or not) to advance technologically and scientifically. So let's think about all the people that Facebook is probably about to hire in Chicago so they can make their own coin. This thing could be a complete flop, but at the end of the day you have 1000 people who have come together and created their own coin with its own scheme. Something that a lot of people haven't actually done no matter how many coins are out there (since there's many clones or 99% clones with relatively minor modifications). This is valuable experience - banks have been playing with Blockchain for the last few years. There are applications there and big banks are already using the technology for a variety of uses
http://www.businessinsider.com/block...n-party-2018-2
So let's think about that for a second. Yes, while you have major financial heads saying Bitcoin is BS (and in the end, it's in their best interest to say these things), you also have the same companies making their own implementations of the underlying technology to use in their institutions and between other institutions. Now think about Chicago - a few companies have already said they were going to move to Chicago for this kind of new emergent technology and another one, Facebook, is probably hiring a lot of people in Chicago for this same reason (at least if I'm reading in between the lines). Chicago is essentially gearing up to be one major hub of R&D (and implementation) of this new emergent stuff. Think about it like a bunch of people in Dallas are creating cool light accessories for cars while people in Chicago are actually creating new types of engines for cars and along the way maybe even creating their own car companies.
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England is a bit ahead of us in terms of that, but there are companies in the US that have created systems that are way faster. That's why i brought up Ripple and how many banks are either using them or experimenting with using. There's a startup in SF, I forgot their name, but I think they created a system that could handle transactions in same day that right now take 2-3+ days.
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