Cryptographer Nick Szabo, also known as a computer scientist, and legal scholar, says that the only way to realize seamless, automated, and global financial integrity is if banks embrace permissionless blockchains, like the system Bitcoin runs on. This University of Washington graduate believes that it is but bureaucracies that don’t want.
Talking to IBTimes, he said that the bureaucracies are so heavily invested in the expertise and importance of local regulations and standards that it’s extremely difficult for them to cut the Gordian knot and implement seamless global systems. He was quoted saying that the bureaucracies keep trying to re-inject points of control.
Thus, points of vulnerability, into blockchains that is, through permissioning come to the front. He says that all this nullifies their main benefits, which come from removing points of vulnerability. However, he reiterates that to remove vulnerability banks also have to remove individual human control and the individuals in charge or with root access.
Nonetheless, he believes that banks naturally hate that loss to their power; however, they do not have any choice if they want to gain the benefits of having an army of independent computers that rigorously, constantly and securely check each others’ work. His views are not the only one that tells how traditional banking organizations are stressed due to disruptive nature of the digital currencies.
He also pointed out that proper financial controls are already somewhat decentralized, thanks to a “human blockchain” of accountants, auditors, etc. checking each others’ work.
Traditional Human Blockchain
Nick Szabo also talks about human blockchain wherein he says that there are half a dozen or so different entities involved when someone does a stock trade on Wall Street, again checking each others’ work. People typically see full vulnerability to unaccountable third parties only in pathological situations where naive newcomers try to do money on the centralized web, as with Mt. Gox.
However, he believes that the traditional ‘human blockchain’ is very labor-intensive and very local. According to him here each is based on local regulations and customs and thus splits the world up into mutually untrusting national silos. Nonetheless, he also believes that permissionless blockchains cut through that like Alexander cutting through the Gordian knot.
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